Indian benchmark stock indices Sensex and Nifty rallied for the second consecutive day, closing nearly 1 per cent higher, driven by gains in metal and auto sectors and positive global market trends.
Stock markets rebounded on Friday with the benchmark Sensex closing higher by 316 points after heavy buying in banking and metal shares amid optimism over trade deal progresses and India's participation in Pax Silica.
The BSE Sensex plummeted 1,236 points, wiping out nearly Rs 7 lakh crore in investor wealth, driven by escalating tensions between the US and Iran and subsequent market selloff.
Indian benchmark equity indices Sensex and Nifty experienced a significant crash in early trade, triggered by a sharp increase in crude oil prices and escalating tensions in the Middle East.
The latest spike in the Vix is a sign that investors are visibly rattled by global developments and fear a further drawdown in stock prices, experts said.
Among the Sensex constituents, Eternal, Tata Steel, Kotak Mahindra Bank, UltraTech Cement, Maruti Suzuki India, Sun Pharmaceuticals, Tech Mahindra, HDFC Bank, Tata Motors Passenger Vehicles, Infosys, Trent, Mahindra & Mahindra, Reliance Industries and HCL Technologies were the gainers. However, Asian Paints, Bharti Airtel, Bajaj Finance, PowerGrid, Axis Bank, ICICI Bank and Titan were among the laggards.
National Stock Exchange on Monday announced the launch of India VIX, a volatility index being disseminated on a real-time basis for the first time.
Under its new chairman Tuhin Kanta Pandey, the Securities and Exchange Board of India (Sebi) has gravitated towards greater transparency and ease of doing business, setting an objective of "effective and optimum" regulation. On Monday, during its first board meeting under Pandey, the regulator has decided to constitute a high-level committee (HLC) to review conflicts of interest and unveiled initiatives to simplify regulatory processes.
The National Stock Exchange has launched a volatility index reflecting the market's expectation of volatility over the near term, which is the next 30 day period. From the best bid-ask price of Nifty 50 Options contracts, a volatility figure (percentage) is calculated, which indicates the expected market volatility over the next 30 days. Higher the implied volatility, higher the India VIX. Implied volatility refers to the implied risks associated with the stock markets.
'Market corrections are a natural part of investing, so it's essential to remain focused on long-term financial goals.'
'The economy is clearly at a very soft spot, and earnings growth is disappointing every day.' 'After three great years, the Indian economy has hit a rough patch.'
'It is advisable to stay away from the markets for now and buy only on a dip.'
On a five-day rolling basis, FPI selling is the highest in 24 years.
Market chatter suggests that the BJP could win fewer than 300.
'Despite the current uncertainties, the long-term outlook remains constructive due to strong fundamentals, government initiatives, and a stable banking sector.'
Investors' wealth jumped Rs 13.78 lakh crore on Monday as the benchmark equity index Sensex hit its lifetime high after exit polls predicted a massive win for the BJP-led NDA in the Lok Sabha polls. The 30-share BSE Sensex jumped 2,777.58 points or 3.75 per cent to hit a record peak of 76,738.89 in early trade. The benchmark finally ended at 76,468.78, registering a sharp rally of 2,507.47 points or 3.39 per cent.
Foreign portfolio investors (FPI) have pulled out $3.5 billion from India's equity markets so far this month. The selling comes on the back of election-induced volatility and the rotation of flows from India to China, where stocks are available at half the valuations. If the selling pressure remains at the current level, this will be the highest FPI pullout since January 2023.
'Investors need to be stock specific and should not rush to buy stocks at the current levels.'
'We emphasise the importance of not basing investment decisions solely on electoral outcomes.' 'Instead, focusing on investing in high-quality businesses capable of prospering regardless of the political landscape is paramount.'
'If the NDA comes to power with 320-330 plus seats, then we could see some correction. We could possibly see a level of 19,500 to 20,000.' 'If the NDA comes to power with a majority of 400-plus, we could see the markets going to about 23,500-24,000 levels.' 'And from there we could see some correction because markets are expensive at this point of time and a correction is overdue.'
According to a report by BofA-ML, capital markets are 'usually jittery prior to the declaration of election results as it is uncertain about the outcome'.
Sundararaman Ramamurthy has been an interesting choice for the publicly-listed BSE, which has seen its chief move to bigger rival -- the National Stock Exchange (NSE) -- in July. Having spent nearly two decades at the country's largest bourse, Ramamurthy is among the early architects of NSE and understands all the cogs of the exchange wheel like only a few others in the country. Just like NSE's core team, which includes its founder RH Patil, the 59-year-old Ramamurthy has worked at the Industrial Development Bank of India (IDBI) before moving to NSE in 1995.
The government may have to rework the valuation of Life Insurance Corporation of India (LIC) for its initial public offering (IPO) if the listing is pushed beyond May, an official said. The current embedded value of LIC, pegged at Rs 5.4 trillion as of September 30 and for the six-month period ended September, will have to be re-evaluated if the issue is pushed beyond May 12, as approved by the Securities and Exchange Board of India (Sebi). This would impact the market value of LIC, that is currently being internally estimated at 3-4 times of the embedded value.
'The correction could take two to three months and traders need to be careful.' 'For investors, this could be a good time to nibble in.'
According to experts, the Nifty has continued to form lower top-lower bottom formations, a trend seen in the last five weeks, and witnessed sharp selling towards 9,700 zones.
Since the Budget announcement on July 5, FIIs have been busy unloading their stock.
Markets rebounded to end marginally higher on value buying at lower levels.
Markets ended at fresh all-time closing highs, led by aggresive buying in capital goods and bank shares.
The volume of shares traded in the stock market had fallen 28 per cent in April. Turnover, or the value of securities changing hands, fell 12.6 per cent. This trend of falling volumes seems to have stabilised in May.
Realty, consumer durables, capital goods lead losses, Broader markets underperform.
India VIX has been mirroring the CBOE Volatility Index.
Market experts predict that the equity markets are likely to remain volatile for the rest of the year.
Nifty advanced 46 points, at 5,833.
Other markets in Asia also ended in higher except Japan which closed flat due to uncertainty over the nuclear plant and economic recovery.
A majority of economists predicted RBI Governor Raghuram Rajan would leave policy rates unchanged on Tuesday and expected a dovish commentary, as crude oil prices and inflation cool off.
After the Franklin Templeton episode, investor confidence has been shaken. Known brands have become more relevant to investors, as long as this psychological impact lasts.
Both indices are down nearly 9 per cent from their all-time highs in mid-January. A sharp reversal seems difficult this time as the peak impact of the virus is yet to play out.
Market sources said other brokerages are also looking to streamline their business models as market volatility, along with increasing competition, has taken a toll on earning yields.
VIX is meant to indicate investors' perception of the annual market volatility over the next 30 calendar days. The higher the value, the higher is the expected volatility and vice versa. VIX touched its historical peak of 85.13 on November 17, 2008, in the aftermath of the collapse of Lehman Brothers. In the past five years, it has stayed below 30.
In the Sensex pack, Sun Pharma was the biggest gainer, rallying 4.48 per cent, followed by Bajaj Auto, Tata Motors, Coal India, Hero MotoCorp, Maruti and HCL Tech, rising up to 3.01 per cent. While, RIL, PowerGrid, HDFC, L&T, IndusInd Bank, NTPC and Bajaj Finance declined up to 1.50 per cent.
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