Gujarat polls make stock markets volatile

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By S Jha

New Delhi, November 9: Gujarat Assembly elections would be a high stake for not only the Bharatiya Janata Party, but also the equity market investors. Early signs of the investors getting jittery with the Gujarat elections have become visible.

Despite strong global clues, the Indian equity markets remained in nervous territory on Wednesday. The domestic institutional investors continued to short the stock markets, as they reported a net sell of over Rs 1000 crore, while the foreign institutional investors were marginally net buyer.

The market participants believe that the trend of the equity market becoming volatile ahead of the Gujarat elections has been seen during the 2017 Assembly polls also. The counters which had seen positive runs in the recent months are seeing massive profit booking. The action was seen in the small cap, midcaps and largecaps, which had in the recent days seen strong rally, but are now reporting massive profit booking. The market participants claim that this is usual phenomenon ahead of the Gujarat elections.

Tejas Networks has cracked by almost 20 per cent this mon after a phenomenal rally on the back of the 5G rollout and the company reporting improved financials. Similar is the case of Data Patterns, which is also sharply correcting after running to a record high recently. Best Agro is also witnessing similar shorting.

Among the large caps Hindalco, Sun Pharma, Reliance Industries witnessed sharp correction in the markets. But Adani companies continue to rally, with the flagship Adani Enterprises crossing Rs 4000 during the day, while Adani Ports showed strong momentum to touch Rs 900 during the day.

“Market volatility will stay till the Gujarat elections. The action on the part of the DII shows that the smart money is taking a retreat to wait for the clear trend from Gujarat,” said one of the market participants.

Incidentally, the ruling BJP is in power in Gujarat for about 27 years, and the investors would prefer a positive vote for the saffron outfit for comforts on the Dalal Street and any adverse outcome against the ruling party would make the markets nervous.