In a dramatic turn of events, early results showing a weak NDA election victory sent benchmark indices plummeting, volatility soaring, and investors hurriedly cutting their long positions on June 4.
The Nifty fell more than 1,300 points to below 22,000, while Sensex tanked over 4,200 points to 72,250 -- both indices down nearly 5-6 percent for the day. This marks the biggest single-day fall since at least February 2022.
Meanwhile, volatility surged with the India VIX jumping nearly 40 percent to above 29. This is the biggest jump in the volatility index in at least 9 years.
Nifty falls below crucial support levels
With today’s fall, the Nifty has broken key support zones at the 22,400-22,450 level, which it had been holding since May 17. It is also sustaining below short-term moving averages of 10-20 EMA, said Sudeep Shah, DVP and Head of Technical and Derivative Research at SBI Securities.
“We believe the next crucial support for Nifty is around 22,150-22,170, where the 100 DMA is placed, a level not decisively breached since November 2023. Below 22,150, levels of 21,900-21,750 could be revisited, which were swing lows of March-April-May 2024,” said Shah.
Longs liquidated, PSU stocks see shorting
Nifty futures witnessed heavy long liquidation June 4, shedding more than 4.5 percent in open interest, which now stands at around 2 crore units in the June series. In today's trade, after the fractured mandate for the BJP-led NDA became apparent in the initial rounds of counting, heavy shorting was also observed in PSU stocks followed by Adani group entities, which are down by 15-20% with high trading volumes, highlights Arun Kumar Mantri, Founder of Mantri Finmart.
Avoid bottom fishing; further selling pressure expected
"Significant selling is clearly seen in the stocks that had experienced a good jump during the recent market rally over the past 1-2 weeks. Overall sentiment on the street has turned extremely negative, with support now placed at 21,650-21,800 levels and resistance around 22,800-23,000 levels on the higher side," said Mantri.
Follow our live blog for all market action
“The crucial level to watch from a reversal perspective would now be 22,600. Avoid bottom fishing and building any fresh positions at the current levels. Wait a few days for the selling pressure to subside and for further clarity to emerge,” said Shah. “With the VIX rising 40 percent today, it is expected to approach 34-36, which would further add to the pressure on the indices,” he added.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those 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!
