Indian market witnessed three green days in May but they were enough to push the S&P BSE Sensex towards 38,000 while Nifty50 climbed 11,400 levels on closing basis last week.
The sharp rally which we saw in the last two trading sessions of the week suggests that Mr. Market is factoring in a positive scenario which in other words mean a stable government at the Center.
Most of the heavy lifting was done by largecaps as the broader market i.e. the small & midcaps have failed to deliver. The S&P BSE Midcap and the Smallcap index closed with a negative bias as compared to over 1 percent rally seen in the Sensex and Nifty50 for the week ended May 17.
The Volatility Index, India VIX, a strong indicator of traders’ perception of market risks is up nearly 30 percent so far in May and is now trading around 28 levels which suggest that upside could remain capped.
All eyes will be on exit polls which are scheduled to come out later in the evening after the seventh phase of polls gets concluded. The polling will be held in 59 constituencies including in Varanasi where Prime Minister Narendra Modi is seeking to retain the seat.
We spoke to experts and they have highlighted two possible scenarios, and their possible impact on markets come Monday morning. There could be a sharp movement on Monday based on the outcome of exit polls because they also bring some decisiveness on the table.
"Any confusion or indecision which is there and is inherent at present in price action may disseminate with time. The volatility we are seeing which is heightened and is at 4 years high may see rollback and evaporate," Mustafa Nadeem, CEO, Epic Research told Moneycontrol.
"Technically we are at very important supports of 11,100 - 11,200. If these are held we may see an up thrust to 11,500 - 11,550. As per derivatives data, the resistance is placed at 11,500 on the upside, while on the downside 11,100 is strong support," he said. Nadeem lists out two possible scenarios: Hung or Mandate and their possible impact on markets on Monday.
Markets have become volatile ahead of exit polls. Investors will be better-off hedging their positions both on long as well as short side, suggest experts. But, once the dust settles down, D-Street will shift its focus back on global cues, as well as earnings.
"If we go by 2004 results, the election outcome will decide the direction of the market in short term but once the euphoria dies down everything gets back to fundamentals like earnings, crude, trade war, etc.," Atish Matlawala, Sr Analyst, SSJ Finance & Securities told Moneycontrol.
Matlawala lists out two possible scenarios and their possible impact on markets on Monday morning in exit polls.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
