Sensex, Nifty give up opening gains, turn flat as investors remain cautious about election results

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BSE Sensex and NSE Nifty 50 extended the previous session's rebound at open May 15, but soon gave up gains and turned flat for the day in the morning trade. Concerns linger about sustaining any intermittent gains till uncertainty remains about the results of the ongoing general elections.

At 10:09 am, the Sensex was up 8 points at 72,784, and the Nifty was up 2.5 points at 22,107. Auto and energy stocks were trying to pull the Nifty index up, while IT and financial services dragged. In the broader market, BSE Midcap and BSE Smallcap index were up 0.2 percent and 0.6 percent, respectively.

The sentiment is cautious despite the previous session's bounceback, said Ambareesh Baliga, an independent market expert. Election results uncertainty is still weighing on the markets, he added. The market will continue to react to various news and rumours till June 4, when the general election results are declared.

The crucial level to watch is 22,600 on Nifty. The upside will be limited until the index breaches this level decisively, said Baliga.

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Nifty has fallen over 600 points in less than two weeks since hitting its all-time high of 22794, as investors turn cautious about election results, and foreign investors sell amid uncertainty to find better value elsewhere.

However, Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said that selling by the FIIs is not a big worry. "This represents hot money, and there's no need for concern about FIIs exiting. There is a strong amount of liquidity waiting on the sidelines to get into Indian markets."

He added that as soon as there is some visibility on election results, the FII money will start flowing back into Indian markets.

Further, experts also expect that volatility will persist or even escalate until the general election results are out. "...Increased volatility lurks beneath the surface, signalled by the India VIX breaching the 20 level," said Prasanth Tapse, Senior VP (Research) at Mehta Equities. At 9.22 am, India VIX was up 1.5 percent at 21.

As long as the index holds the support of 21,820, the relief rally will continue, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates. "The 21-DEMA (Double Exponential Moving Average) is placed near 22,315, which will act as an immediate hurdle for the index." 21-DEMA is a line on a stock chart that shows the average price of the stock over the past 21 days, giving traders an idea of its recent trend.

For the short term, we expect a pullback towards 22,300 levels," Yadve said. He said that if the index sustains above 22,315, the pullback rally might test 22,500 levels.

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