Markets To Remain Volatile Until Election Outcome, Says Analyst

Don't expect an upside or downside in the equity markets until a clear indication about the results to the ongoing Indian election emerges. That's according to Aditya Arora, founder and multi-asset research analyst at Adlytick.in, who expects "erratic behaviour" in the markets.

Major events like the Lok Sabha elections and the upcoming Union budget have induced volatility and uncertainty in the stock markets, he told NDTV Profit. The bourses, he said, will move swiftly in one direction after the general election results.

He reiterated a basic rule in investing during such conditions: buy stocks when markets are down and sell when they're at a high.

The Indian benchmark indices reached their lower band for the day on Friday. With the NSE Nifty 50 falling to 22,348, Arora said it would establish support levels at 22,300 and a stop loss of 22,280. He sounded bullish on the Bank Nifty and S&P BSE Sensex 30 along with commodities and metals, which may have a strong run in the May series.

Vinod Nair, head of research at Geojit Financial Services, explained the trend from a different angle. "Profit-booking and a degree of caution ahead of the release of the US non-farm payroll resulted in selling pressure in the market," he said.

"However, the lack of significant negative surprises in Q4 earnings so far, along with a decline in oil prices, might help to mitigate the downside," Nair said. "Though the correction was broad-based, the large-cap stock was the key underperformer due to the moderation of FII exposure to the domestic market."

The Nifty 50 ended 172.35 points, or 0.76%, lower at 22,475.85. The Sensex fell 732.96 points, or 0.98%, to close at 73,878.15.

Dharmesh Kant, head equity research at Cholamandalam Securites Ltd., urged investors to not worry about the fall in Reliance Industries Ltd.'s share price on Friday.

“Today’s correction with Reliance is not specific to it but more to do with the Nifty Large Cap basket selling, which is happening in the market,” he said.

In the last few days, markets had rallied on the back of liquidity inflows, he said.

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