Indian equities faced yet another volatile session on Wednesday as investors turned cautious amid the ongoing Lok Sabha elections. The S&P BSE Sensex, after gyrating 611 points intraday, ended at 73,466, down 45 points or 0.06 per cent.
The Nifty, on the other hand, settled unchanged at 22,303. BPCL, Tata Motors, Hero MotoCorp, Power Grid, Hindalco, Coal India, NTPC, L&T, and Nestle India were the top gainers, rallying up to 2.7 per cent on the benchmarks, that helped trim the losses.
In the broader markets, the BSe MidCap and SmallCap indices outperformed the frontline indices as they climbed 0.78 per cent and 0.5 per cent, respectively.
The pressure on the market now is due to the uncertainty regarding the election outcome. There is lots of speculation in the media regarding this and this has added to the uncertainty in the market. The India VIX spiking 72% from the April lows indicates that high volatility will persist for some more time. It is important to understand that VIX is based on Nifty index options prices. The spike in VIX is due to rising volume of options trades. Many investors are buying put options to protect their portfolio in case of an unexpected election outcome. For long-term investors the ongoing volatility and uncertainty present buying opportunities.
Global Cues
On Wednesday, Asian stocks showed a lack of clear direction, while the dollar maintained its strength despite lower U.S. Treasury yields. Market sentiment was influenced by mixed signals from U.S. policymakers and economic data, prompting assessment regarding the trajectory of Federal Reserve interest rates.
The S&P 500 and Dow Jones Industrial Average both clung onto gains to ended slightly higher on Tuesday, extending recent winning streaks fueled by renewed expectations that the Federal Reserve will cut interest rates this year.
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