Stock Market falters on fear factor spike as risk-off strengthens
Image credit X Rashtriya Janata Dal
UBS weighs four prosects of Lok Sabha poll outcomes for stock market
By S Jha
New Delhi, May 28: The approaching D-day is gripping Dalal Street with uncertainties. Sensex almost 400 points from the day’s high on Tuesday. Advance and decline ratio favoured the sellers on the street on Tuesday.
Nifty plunged by almost 100 points from the day’s high. The volatility index on the street was seen at multi year high. The volatility kept indices choppy all through the day.
Bank Nifty also shed almost 300 points from day’s high on Tuesday. The collapse of the indices in the second half yesterday knocked off the investors’ confidence.
The market participants are mulling over several probabilities concerning the Lok Sabha poll outcome. They argue that the market has already factored in the return of the Narendra Modi-led government at the Centre.
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But a contrary verdict may shake out the market, argue the market participants. The UBS also has come out with four probabilities. It examined the prospects of four political scenarios.
The brokerage major has argued that the single-party majority government led by Modi may extend the strength in the equity market. The possibility of the BJP lacking a majority but cobbling up a majority with allies may dent the investors’ confidence.
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Also, if the BJP is voted out of power, the street can be full of uncertainties. Besides, a hung Parliament may bring a greater degree of uncertainties in the equity market.
The brokerage major has argued that there could be a spike in bond yields amid rise in the political uncertainties. It advised the people to consider bond investment if there is a political uncertainty after the poll verdict.
The polling for the seventh phase will be held on June 1. The counting of votes will take place on June 4. The equity market will be open for trading on the day of the counting of the votes.
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The street is also bracing for the exit poll outcome. The impact of the exit poll will be seen in the market in Monday’s session.
The market participants concur that the remaining sessions in the current week will be full of volatility. Besides, the monthly option contract expiry will also take place on May 30.
Affirming lack of confidence on the street, the heath sector scrips which are known to be defensive bets were seen to be in demand in Tuesday’s session.
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