Stock Markets in bear grip: How long will the downward trend continue?

Downward Spiral Continue Ahead  of loksabha Election Results

Posted By NILESH WAGHELA

Mumbai: As the final Phase of the Lok Sabha General Election 2024 approaches, the India's headline indices, BSE Sensex and NSE Nifty, continued to experience a notable decline, marking the fifth consecutive day of losses, sending shockwaves to investors.

Benchmark indices Sensex and Nifty traded lower for the fifth straight day on Thursday as investors booked profits and chose to stay cautious ahead of the Lok Sabha election results on June 4.

The 30-share BSE Sensex closed at 73,885.60, down by 617.30 points or 0.83 per cent. Meanwhile, the NSE Nifty ended the day at 22,488.65, down by 216.05 points or 0.95 per cent on Thursday, May 30.

The reason for the current decline can attributed to factors such as heavyweight stocks like Reliance industries, TCS, and Infosys dragging down the indices. Another major factor for the market in red includes the concerns surrounding the upcoming election results on June 4, heightened anxiety among the investors.

Furthermore, the monthly Nifty expiry, adds another factor, prompting traders to square of their positions. Drawing cues from the Asian and international markets, particularly the decline in the US market, also fueled apprehension among Indian investors.

In Asian markets, Seoul, Tokyo, Hong Kong and Shanghai settled lower. Meanwhile, the European markets were trading on a positive note with gains.

India VIX—also known as the Fear Index—the volatility index that measures the market's expectation of volatility, rose to over 24 on Thursday, despite global rating agency S&P revising its India outlook from to positive from stable.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,841.84 crore on Wednesday, according to exchange data. Analysts said stock markets are witnessing 'buying on dips and sell on rallies' amid uncertainty ahead of the general poll results.

V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, said the markets will continue to see heightened volatility on June 3 and 4 as well.

The last phase of polling for the ongoing general elections is scheduled for June 1 and the results will be declared on June 4th.

"If the exit polls indicate a clear trend, which is favourable from the market perspective, buying decisions will be easy even after a spike in prices," news agency PTI quoted Vijayakumar as saying.

"The highly valued mid and smallcaps remaining resilient and the fairly valued largecaps turning weak is a short-term aberration. Long-term investors can profit from this temporary aberration," he said.

Independent market analyst Ambareesh Baliga has been quoted as saying that the markets will rally if the NDA wins over 380 seats.

"However, if they secure only 320-330 seats or fewer, a correction is expected," Moneycontrol quoted him as saying.