At the beginning of May, the Indian market experienced a surge in optimism, driven by several key factors. Positive sentiment was bolstered by strong Foreign Portfolio Investor (FPI) inflows, easing geopolitical tensions in the Middle East, and the expectation of continued political stability in the upcoming Lok Sabha elections.
However, as the month progressed, the landscape swiftly shifted. Optimism began to wane as these factors turned unexpectedly. FPI inflows dwindled, geopolitical tensions resurfaced, and political uncertainties intensified, casting a shadow over the previously optimistic outlook.
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As per the recent media reports, a lower voter turnout so far in India’s general election has raised questions about whether the ruling Bharatiya Janata Party (BJP) and its allies can achieve the landslide victory predicted by opinion polls just a month ago.
Meanwhile, the sharp rally in 2023, which continued during the first quarter of CY24, has led to stretched valuations for the market, prompting investors to secure profits. Consequently, benchmark indices, which had initially soared on the wings of optimism, logged the worst performance in May.
This downturn evaporated investors’ wealth at an alarming rate, leaving many startled by the sudden shift in market dynamics. Over the past five sessions, the broader market saw a majority of stocks turn red, with many of them trading close to their lowest levels in several…
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