After state wide election results were announced indicating a strong performance by the BJP, traders braced themselves for a volatile Monday morning on the stock markets, and the markets did not disappoint. The Sensex opened 400 points above Friday’s close, sending strong signals that BJP led wins in state elections sends a positive boost to investors. A strong resistance at 26,500 on the Sensex kept the index from rising further.
The hike in natural gas prices, combined with deregulation reforms on the government’s previous control of diesel prices, allowed the markets to surge further. Investors were keenly awaiting the state election results; now that it is clear that the BJP has majority control on a state wide level, investors are sweeping reforms to be rolled out over the next two weeks.
Further deregulation from the government combined with strong corporate earnings can bolster the markets. As the Sensex approaches its all time high of 27,354, it is a surefire bet that volatility will pick up over the next month. It remains to be seen how the markets unfold over the next 5 weeks until 28th November, when GDP figures are announced.
