Exit polls results, BJP seat wins, stock market: Nifty, Bank Nifty may see gap-up opening; key levels to watch (2024)

Cheering the better-than-expected exit poll results, Indian equity markets are likely for a gap-up opening on Monday, ahead of the actual outcome on Tuesday, June 4. Market participants believe that the headline indices may give a thumbs up to the prediction of a third term for the Prime Minister Narendra Modi.

Strong exit poll outcome for the ruling government, robust quarterly GDP data, encouraging monthly GST numbers and expected short covering from FIIs is likely to push the Indian indices higher, said Manish Chowdhury, Head of Research, StoxBox.

"Our sense is that it would be prudent to continue with the existing equity allocation as markets reward predictability in policy and decision making in the overall economy. With the actual election outcome mostly a tail risk now, we would not be surprised to see the return of FII flows into the markets which would further aid the strong domestic participation," he said.

The market is expected to react positively to the upcoming budget, but there might be some profit-taking after the recent rally, said Arpit Jain, Joint MD at Arihant Capital Markets. In the short term, however, the market might consolidate as everyone waits for the details of the July budget, he said.

Majority of the analysts, reading the charts, believe that headline indices open with big gains, with Nifty scaling 23,000 mark and Nifty Bank mounting to 50,000 in a couple of sessions. Both the indices may scale their new life-time highs amid the election euphoria, technical analysts suggest.

Market participants will react to the exit polls on Monday. The market is approaching the event with caution, and the positive surprise from exit polls can lead to a rally as the majority to the NDA. Conversely, a negative surprise from actual results might trigger a knee-jerk reaction in the market, said Santosh Meena, Head of Research, Swastika Investmart.

On the technical charts, Nifty corrected from the trendline resistance at 23,100 but managed to hold the support zone at the clusters of the 50-DMA and 20-DMA. The immediate resistance zone lies between 23,000 and 23,100, with subsequent target levels at 23,300, 23,500, and 24,000. If Nifty slips below the 22,400 level, the next support levels to watch are 22,200, 22,000, and 21,700,he said .

"Similarly, Bank Nifty respected its 20-DMA after a pullback from the 49,500–50,000 supply zone. A break above 50,000 could trigger a rally towards the 51,000 and 52,000 levels. On the downside, if it slips below the 48,000 level, the next support levels are 47,000 and 46,200," Meena added.

The exit polls are expected to cause a gap up, but this gap might not sustain through the day if it does not take Nifty passes 23,000, Rahul Ghose, CEO of Hedged dot in, an AI drive algo-trading platform. If the gap completely fails and forms an inverted hammer, that is, it gaps up and then retracted back completely, then we shouldn't expect any big bang up move on Tuesday, he said.

"However, if the gap even sustains 50 per cent, then one can expect another big gap-up on Tuesday morning assuming favourable results for the NDA. For Nifty a closing above 23,000 is a sign of further momentum and for Bank Nifty a closing above 50,500 is sign of momentum. It is also important for the VIX to cool off with the gap up for it to sustain," Ghose added.

Technically markets would trade highly volatile with high VIX index, holding markets above 22,400 levels would keep us in a positive zone with possible upside towards 22,800-23,000 levels in coming days. Close above 23,111 would be highly watched, said Prashanth Tapse, Senior VP (Research), Mehta Equities .

According to Arvinder Singh Nanda, Senior Vice President at Master Capital Services the 22,400-mark, which is the near 50-day EMA is critical on the downside as a support, while the 23,400 level will be crucial on the higher side as a resistance from a technical perspective.

"We cannot rule out the possibility of profit booking in the second half of the trading session following an initial upward movement. Historical trends from the previous two election outcomes in 2014 and 2019 have shown similar patterns, where the market closed with minimal change after experiencing significant volatility during the early trading hours," he said.

Contrary to the majority of Dalal Street participants, some analysts suggest that investors should book profits at higher levels where the markets may correct sharply in the coming months. However, they also do not rule out the possible new highs for the headline indices amid the euphoria.

"We anticipate Indian equities to rise over the next few days, with the Nifty reaching a new all-time high this week. We expect the Nifty to reach approximately 23,200-23,300 levels during this period," said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360, suggesting investors can buy the gap up with focus on PSUs, and defense and infrastructure companies.

"In the longer term, we continue to believe that Indian equities represent the biggest bubble in the history of world equity markets. We expect the Nifty to correct down to 18,000 levels by October 2025. Therefore, we recommend that investors book profits when the Nifty climbs above 23,000 and gradually reduce their exposure to Indian equities," Goel cautioned.