Unbelievable, but markets survive election results, expectations of 'Black Tuesday'; this is the reason why

In what was a busy day for the Indian markets in the wake of Urjit Patel's exit as Reserve Bank of India (RBI) governor and state assembly election results in five states, both Sensex and Nifty recovered from the initial slump and closed on a very positive note. Sensex was up by 190.29 points or 0.54% and closed at 35150.01, while the Nifty was up by 60.70 points or 0.58% and closed at 10549.20.

While expectations were mostly for a Black Tuesday, in an intriguing revelation, experts indicated that the activity in markets had more to do with Urjit Patel's surprise exit from RBI on Monday night than the assembly result in 5 states: Rajasthan, Madhya Pradesh, Chattisgarh, Telangana and Mizoram. 

Kunal Saraogi, CEO, Equity Rush told Zee Business Online that even though the election results were not to market liking, the response by investors was good. 

"The results have not been to markets liking. Despite that we have seen a good response. Even though the market opened with a big drop, it recovered and closed at the day's high. Markets have largely discounted BJP's loss in at least two states and also, the resignation of the RBI governor," he said. 

"The initial drop was due to the overnight resignation of the RBI governor which was completely out of the blue. But, markets went very aggressive towards the later half and the short covering took them to the day's high," he added. 

Saraogi believes that no negative impact will be seen on Wednesday either and added that short covering should drive the gains. 

"The election results have been factored in and politics should not affect the market. The short coverings alone should take the market back to reasonable level," he said. 

Swati Hotkar, Equity Technical Analyst, Nirmal Bang told Zee Business Online that it would be important to see that Nifty sustains at the 10,540 level, which was the moving average on Tuesday.

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"The recovery in the later half of the day was a positive indication. But, we need to see that Nifty sustains at the 10,540 level which was today's moving average," she added.

Hotkar too agreed that the initial slump was due to Patel's resignation and added that the election results were already factored in by the markets.

HDFC Bank, Bharti Airtel, HPCL and IOC were among the losers while Yes Bank and Sun Pharma were the top gainers today.