Sensex and Nifty 50 (NSE) Tumble for Fifth Consecutive Session Amid Market Volatility

• The Indian stock market experienced a widespread selloff on Thursday, May 30, on the expiry day of May futures and options (F&O) contracts.
• Market participants remained jittery ahead of the Lok Sabha election 2024 results, which are set to be announced next week on June 4.
• “After six phases of Lok Sabha Elections, the market is still unconvinced about the kind of government formed after the Lok Sabha Polls,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

Indian stock market faces significant losses amid election uncertainties and global pressures.

Market Reaction to Election Uncertainty

The Sensex and the Nifty 50 experienced their fifth consecutive session of losses, each dropping by about 2 per cent over this period, resulting in investors losing nearly ₹10 lakh crore. Election-related nervousness refuses to fade as uncertainty about the election outcome has grown in the last few days. The last phase of the election is to be held on Saturday, June 1, while the counting of votes will start on June 4. The results of the election could be clear on the same day later.

Impact of Global Factors

Other factors, including weak global cues, rising US bond yields, geopolitical tensions, and waning hopes of early rate cuts have also contributed to the recent rout in the Indian stock market. The benchmark index is taking cues from the US market as treasury yields continue to climb following the stickiness of global inflation, delaying the central bank’s interest rates cut policy. Meanwhile, the broader market continued the weak trend, led by profit booking, due to feeble closing of monthly expiry owing to lack of interest to hold short-term positions, as exit poll is slated in the weekend.

Sectoral Performance

Barring Nifty Media (up 0.48 per cent), Nifty Bank (up 0.37 per cent) and Private Bank (up 0.32 per cent), all sectoral indices ended with losses. Nifty Metal (down 3.01 per cent), IT (down 2.19 per cent), Healthcare (down 1.85 per cent), Pharma (down 1.81 per cent), Consumer Durables (down 1.67 per cent), FMCG (down 1.26 per cent), Oil & Gas (down 1.25 per cent) and Auto (down 1.21 per cent) lost significantly.

Conclusion

The Indian stock market is currently grappling with a combination of domestic election uncertainties and adverse global factors. Investors should remain cautious and selective in their trading strategies, as the market is expected to remain volatile until there is more clarity on the election results and global economic conditions. The short-term outlook remains uncertain, but a clearer picture is likely to emerge post-election results.