InvestorQ : Why was there so much of buying in the markets on Monday? Was it only due to the exit poll results?
Anu Biswas made post

Why was there so much of buying in the markets on Monday? Was it only due to the exit poll results?

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Neelam Naik answered.
1 year ago
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The exit polls did estimate that there could be a stable majority government at the center led by the NDA. That would give the market hope for a continuation of the reforms process. That was one of the major reasons that drove the sentiments in the stock market. The market players have been looking for a stable government rather than a coalition government of too many parties that are unstable, to begin with. While the final outcome may be only known on 23rd ofMay, based on the exit polls it does look like you could see a stable government post on the 23rd of May. Markets always pay a premium for certainty and that is what you saw. Also, sectors like banks and NBFCs which are sensitive to government regulations preferred the status quo where the NCLT and the liquidity infusion have been going on in right earnest. That is the reason you will find that PSU banks and NBFCs were among the biggest gainers.

If you look at the international and domestic buying numbers, the FIIs bought nearly Rs.1724 crore of equities while the domestic funds sold nearly Rs.575 crore on Monday. That could mean that a large part of the rally on Monday could also have been driven by short covering in banks and autos. The rally was most likely a combination of a shift in sentiments, FII buying and short covering by traders.

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