- The Indian stock market continued reeling under pressure on Tuesday, May 28, as the benchmarks—the Sensex and the Nifty 50—ended in the red for the third consecutive session.
- The market has been swinging between gains and losses amid a lack of fresh triggers, high valuation, and mixed global cues.
- “The Indian market exhibited mild consolidation post the recent sharp surge. The uncertainty-led volatility will likely continue as the market approaches the election outcome,” said Vinod Nair, Head of Research, Geojit Financial Services.
Discover the latest developments in the Indian stock market as Sensex and Nifty 50 face a third consecutive session of losses amid heightened volatility and election-related uncertainties.
Market Volatility Amid Election-Related Caution
The Indian stock market has seen strong volatility this month amid strong foreign capital outflow due to election-related caution. The market has been swinging between gains and losses amid a lack of fresh triggers, high valuation, and mixed global cues. The India VIX, an index measuring market volatility, has surged by 88 per cent in May so far, indicating heightened nervousness in the market due to the ongoing Lok Sabha election. On Tuesday, May 28, the India VIX rose over 4 per cent to the 24.20 level.
Impact of Macroeconomic Indicators
In addition to election-related uncertainties, several key macroeconomic indicators, such as India’s Q4 FY24 GDP figures, US PCE inflation data, and European countries’ inflation data, will influence the market sentiment this week. Experts expect the market to remain volatile till the election outcome on June 4.
Performance of Key Indices
Nifty 50 opened 45 points higher at 22,977.15 against its previous close of 22,932.45 and climbed 66 points in intraday trade to the level of 22,998.55. The index, however, failed to hold gains, a trend observed in the last few days, to close 44 points, or 0.19 per cent, lower at 22,888.15 with 28 stocks in the red. The Sensex opened at 75,585.40 against its previous close of 75,390.50 and touched its intraday high of 75,585.40. The 30-share pack finally closed with a loss of 220 points, or 0.29 per cent, at 75,170.45, with 20 stocks in the red.
Sectoral Performance
The majority of sectoral indices ended in the red. Nifty Realty (down 2.16 per cent), PSU Bank (down 1.28 per cent) and Oil and Gas (down 1.02 per cent) lost significantly. Nifty Bank slipped 0.28 per cent, while the Private Bank index dropped 0.31 per cent. Mid and smallcaps suffered more. The BSE Midcap and Smallcap indices lost 0.63 per cent and 1.09 per cent respectively. The overall market capitalisation of the firms listed on the BSE dropped to nearly ₹417 lakh crore from nearly ₹420 lakh crore in the previous session, making investors poorer by about ₹3 lakh crore in a day.
Top Gainers and Losers
Shares of Divi’s Labs (up 3.05 per cent), SBI Life Insurance Company (up 2.96 per cent) and HDFC Life Insurance Company (up 2.44 per cent) ended as the top gainers in the Nifty index. On the other hand, shares of Adani Ports (down 2.17 per cent), Power Grid (down 1.64 per cent) and BPCL (down 1.59 per cent) ended as the top losers in the Nifty index.
Expert and Technical Views
“The underlying earnings growth for the March quarter results so far was largely above expectations, which would likely support the valuation, which is currently moderately above the long-term average,” said Vinod Nair, Head of Research, Geojit Financial Services. Shrikant Chouhan, the head of equity research at Kotak Securities, observed that the current market texture is non-directional. “On the downside, 22,800 -22,750/74,900-74,700 would be the key support zones while 23,000-23,100/75,500-75,700 could be the crucial resistance areas for the day traders,” Chouhan said. “For the day traders now, buying on dips and selling on rallies would be the ideal strategy. However, below 22,750/74,700, the sentiment could change. Below this, traders may prefer to exit out from trading long positions,” said Chouhan.
Conclusion
The Indian stock market remains under pressure with heightened volatility due to election-related uncertainties and key macroeconomic indicators. Investors are advised to stay cautious and consult certified experts before making any investment decisions. The market is expected to remain volatile until the election outcome on June 4, with significant movements influenced by both domestic and global economic data.
