New Delhi, June 4 : Monday, June 3 saw markets record their best performance in recent times, with NIFTY gaining 733.20 points on the back of Exit Polls for the general elections 2024, where the pollsters in a 'poll of polls' gave the ruling NDA around 370 seats.

The high on NIFTY was at 23,338.70 points. NIFTY closed at 23,263.90 points. On BSESENSEX, the gain was at 2,507.47 points to close at 76,738.89 points. The high for the day was at 76,468.78 points. These incidentally were new lifetime highs at closing and intraday levels.

Today, Tuesday, June 4, was a reversal, a terrifying and scary one. The lows made on BSESENSEX were at 70,234.43 points and 21,281.45 points on NIFTY. The intraday point fall on BSESENSEX was roughly 6,200 points, and 2,000 points on NIFTY.

What caused it? Simply the fact that the NDA fell short at below 300 seats or about 293 seats. The final closing today was BSESENSEX, down 4,389.73 points to close at 72,079.05 points, while NIFTY lost 1,335.70 points at 21,928.20 points.

What from hereon is the key question. The BJP, along with its allies, has managed to become the largest faction and is ahead of the opposition by about 60 seats. The NDA should be able to form the government, and things would be as usual as far as current economic policies are concerned. This will not impact the current policies.

What would change is the reform agenda of the party where they wanted to bring about a common civil code and other such measures which would need a much bigger majority. The euphoria and the disaster are both behind us, and they have happened within a mere 24 hours of each other.

Going forward, the highs made on Monday at 76,738 and 23,338 on NIFTY would act as medium-term resistances, while lows made on Tuesday at 70,234 and 21,281 would act as strong supports. The range is a massive 6,500 points on BSESENSEX and 2,150 points on NIFTY. This is a huge range and looks like holding till big news flow happens over the next four to six months.

With the market range specified, the next question is about the direction of the market. There would be political stability in the time to come as the mandate is not small and fairly clear. The government would be able to run its regular policies without any hindrances but would not have the majority that it had over the last two terms.

With such a mandate, it would be business as usual for all regular business and tough times for structural changes. For investors at the markets, it's more or less business as usual, and FPIs who were sellers are likely to remain negative to neutral on the markets in the short to medium term.

In conclusion, markets would remain volatile and choppy in the immediate short term. Expect stability once government formation and getting back to normalcy is achieved.

Trade cautiously.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

/IANS