Sensex falls below 74000, Nifty slips below 22500 amid volatility; FMCG, IT drag indices

BSE Midcap falls 0.1 percent and BSE Smallcap sheds 0.4 percent

The Sensex and Nifty opened lower on May 21, influenced by Asian indices, which took a breather after seven consecutive days of gains. In the domestic market, metal and mining company stocks saw gains, while FMCG and IT stocks were the biggest laggards.

At 09.17 AM, the BSE Sensex was down 150 points, or 0.2 percent, at 73,855, and the NSE Nifty 50 was down 37 points at 22,464. About 1,337 shares advanced, 1,453 shares declined, and 213 shares remained unchanged.

"The factor truly moving the market is the way the general elections are turning out across various phases," said Aishvarya Dadheech, Founder & CIO of Fident Asset Management, adding that the low voter turnout had been keeping investors cautious. However, an improvement in voter turnout after phases 4 and 5 has sparked some optimism. Dadheech noted that this has led to gains in defense, PSU, and railway stocks.

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Volatility to Persist Until Election Results Are Declared

The volatility index India VIX rose over 8 percent to 22.3. Market experts attribute the rise in volatility to the uncertainty over election results, expecting markets to remain volatile until the results are announced.

“Amid ongoing uncertainties surrounding election results and quarterly earnings, we anticipate continued volatility in the near term,” said Vinod Nair, Head of Research at Geojit Financial Services. Dadheech mentioned that the continuity of the government is largely factored into current prices, so the market may remain lackluster post-elections. Following the election results, the market will closely monitor new policies and take cues from them.

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FIIs Cautious Now, Expected to Return After Election Results Clarity

Regarding the selling by FIIs, Dadheech stated that foreign investors are currently cautious and in a ‘wait and watch’ mode. FIIs are favoring cheaper stocks in other emerging markets, but experts anticipate a turnaround in this trend once election results are announced and stability is restored.

"On the level-specific front, 22,350-22,300 is likely to cushion any upcoming intra-week blips, followed by the sacrosanct support of 22,200 in the short term," said Sameet Chavan, Head of Research, Technical and Derivative at Angel One. "On the higher end, 22,600-22,650 remains a sturdy resistance before Nifty could claim its lifetime high of 22,800," he added.

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