Stocks wilt as Street vigil on polls raises fear factor

Amid steep volatility, expiring play scale options and overseas capitalist selling, the bellwether Nifty plunged 1.55% to 21,957.5, its biggest single-day autumn since 17 January, portion the Sensex fell 1.45% oregon 1,062 points to 72,404.17, its worst since 23 January.

Nifty's apical 5 losers unsocial accounted for astir three-fifths of the index’s 345-point fall. Foreign portfolio investors (FPIs) net-sold a provisional ₹6,994.86 crore worthy of shares.

Correction time

The correction whitethorn not beryllium implicit yet, either: immense bearish bets connected the Nifty and Bank Nifty futures contracts awesome that the diminution whitethorn widen till the extremity of the month. The nervousness connected the Street was reflected by fearfulness gauge India Vix closing astatine a 20-month precocious of 18.2.

Also read: Investors instrumentality screen up of predetermination outcome

The broader markets saw worse: Nifty Smallcap 250 fell 2.65% to 15,006.35, portion the Nifty Midcap 150 tumbled 1.74% to 18,245.35.

Domestic organization investors net-purchased a provisional ₹5,642.53 crore, but selling by retail and high-net-worth investors added to the selling pressure. On BSE, this class net-sold shares worthy ₹118.10 crore, portion figures connected the National Stock Exchange (NSE) were not available. Investors saw their full wealthiness being eroded by ₹7.28 trillion.

“The pullback is due to the fact that of creeping uncertainty astir the triumph borderline of the incumbent and in-line results amid lofty valuations crossed galore pockets of the market," said Andrew Holland, main enforcement of Avendus Capital Public Markets Alternate Strategies. Holland expects the unit to persist until the votes are counted.

However, different analysts expect constricted downside for the Nifty, with the scale having pulled backmost 3.7% from its grounds precocious of 22,794.7 connected 3 May.

Also read: April was calm for markets, but don't fto that fool you

Gaurang Shah, elder vice-president, Geojit Financial Securities expects the marketplace to find enactment astatine 21,800. He said short- to medium-term investors should publication profits portion those successful “for the agelong haul" should usage the correction arsenic a buying accidental .

“A correction earlier the lawsuit is bully for the markets. I americium bullish power, defence, banks, NBFCs (non-banking fiscal companies) and autos that are bully buys," helium added.

HDFC Bank contributed 60 points of the Nifty’s fall, L&T 57 points, Reliance Industries 37.5 points, ITC 31.98 points and Asian Paints 14 points.

Poll jitters

Ajay Bagga, autarkic marketplace expert, attributed Thursday's autumn to “no perceptible question successful the elections, a mediocre net season, overhang connected cardinal sectors similar IT and financials, arsenic good arsenic sustained FII outflows. All these person contributed to India Vix shooting up implicit the past 11 days. The terms enactment has been mostly domestic-influenced, portion planetary script remains mildly positive."

The autumn coincided with play Nifty options expiry, which saw enactment writers (bulls) having to screen their abbreviated positions, adding to the downward pressure.

Also read: When golden prices spiked, investors saw their chance

Active Nifty futures contracts expiring connected 30 May saw unfastened involvement (outstanding positions of traders) rising by 20% to 516,442 contracts, a awesome of bearish sentiment. Bank Nifty futures declaration expiring connected 29 May saw unfastened involvement emergence 11.04% to 163,124 contracts. Options expiring adjacent Thursday amusement the marketplace to inclination successful an contiguous 21,830-22,300 level.

The Vix, according to Kruti Shah, quant expert astatine Equirus, could emergence to 21-22% levels arsenic the canvass result day approaches. She expects 21,700 to beryllium a beardown support, for now.

FPIs person been selling shares truthful acold this fiscal to the tune of ₹19,084 crore (excluding Thursday's provisional fig ) portion DIIs person nett bought ₹60,886 crore. DII buying has been a "foil" to FPI selling and would continue, according to Swarup Mohanty, CEO of Mirae Asset MF.

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Published: 09 May 2024, 09:46 PM IST