How will SENSEX, NIFTY react on Monday? These factors to decide market direction

Last week, Indian markets snapped their two-week winning streak to close lower amid profit booking and uncertainty around the election results. NIFTY50 declined 1.86% to end the week at 22,530, while SENSEX lost 1.92% to close at 73,961. Meanwhile, the volatility index, a barometer to gauge market sentiments, rose 13.3% during the week to 24.6.

On Monday, markets are likely to react to exit poll numbers, which were announced on Saturday. Besides this, several other key factors to dictate the market direction. Here are the complete details:

Exit Poll 2024: Markets will react to exit poll prediction

On Saturday, most exit polls predicted a hat-trick for the BJP-led NDA. The average of major exit polls estimates NDA is likely to get 366 seats, while the opposition INDIA bloc is expected to win 144 seats.

As per experts, exit poll numbers predict a thumping majority for the incumbent government is positive for the markets. The exit poll outcome has given a sigh of relief to investors and removed the so-called election jitters that have been weighing on markets in the last week of May. The final vote count will take place on 4 June (Tuesday).

Experts believe that if the actual election results are in line with the exit polls, then markets could rise in the short term. However, after initial euphoria, the market will settle soon and the focus could shift towards execution and policy announcements by the new government in the first 100 days.

Banking, defence, PSU, automobile and manufacturing companies are likely to be in focus on Monday as political stability and continuity in policy making will act as triggers for these sectors.

Also read: Exit Poll highlights: Poll of polls predicts hat-trick for NDA with 360+ seats

GDP numbers to boost market sentiments

India’s gross domestic product (GDP) growth surpassed all expectations and stood at 7.8% in the fourth quarter of FY24. The higher-than-expected GDP numbers, which came after market hours on Friday, are likely to provide additional support to the markets on Monday.

Read More: Indian economy grows at 7.8% in Q4, 8.2% in FY24

FIIs and DIIs turning net buyers

On Friday, foreign institutional investors (FIIs) turned net buyers of Indian equities after two consecutive days of sell-off. FIIs were net buyers with ₹1,613 crore, while domestic institutional investors (DIIs) brought ₹2,114 crore. This could be sentimentally positive for the investors and could reflect in Monday’s market movement.

US markets close higher on Friday

US markets closed higher on Friday. Dow Jones closed 1.5% higher, while the S&P 500 was up 0.8% after the Personal Consumption Expenditures Price (PCE) index rose 0.3% in April, in line with forecasts. Meanwhile, international crude oil prices remain stable, with Brent Crude Oil around $81.37 per barrel. This is likely to be reflected in Indian markets on Monday as well..

Conclusion

The upcoming week will be action packed for the Indian markets, with many key events like the general election results on June 4, monthly auto sales numbers. Also, the Reserve Bank of India (RBI) will announce its interest rate decision on 7 June. Amid multiple key events, volatility in markets is likely to stay higher. Hence, investors should do in-depth research and detailed analysis before trading and investing in the stock markets.

To trade and invest on Upstox, CLICK HERE to open a free demat account today.