Street takes cheer from poll results, but will the gains sustain?

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Subscribe to enjoy similar stories. Markets raised a toast to the thumping Maharashtra mandate, lifting stocks for a second straight day as bargain hunters returned. Benchmark indices extended Friday's gains to Monday, with the Nifty clocking the biggest two-day rise since early June.

However, market experts are unsure if the gains will sustain or prove to be fleeting. After tumbling 11% from its 1 October record, the Nifty has in two sessions recouped nearly 4% from its recent low on 21 November. The recovery was led by a surge in stocks like Power Grid Corp.

of India, Larsen & Toubro, Tata Consultancy Services, UltraTech Cement, and Apollo Hospitals Enterprise. Foreign institutional investors net purchased Indian equities worth ₹9,948 crore, while domestic institutions net sold shares worth ₹6,908 crore. The HDFC Bank stock rose 2.3%, contributing the most to Monday's gains, as the increase in its weighting in MSCI indexes took effect.

According to Nuvama Institutional Equities, India may witness about $2.5 billion net passive FII flows thanks to the MSCI rejig, including $1.9 billion in HDFC Bank. Manish Sonthalia, chief investment officer of Emkay Investment Managers, termed the recovery as a “possible temporary pullback" after a relentless fall. Despite a good harvest, government spending and wedding season fuelling demand, what's worrisome is that a permanent bottom has yet to emerge, he said.