The Indian stock market witnessed a significant selloff on Tuesday, with the benchmark Nifty 50 index losing around 700 points and the BSE Sensex plummeting by over 2,000 points in early morning trading. The Bank Nifty index, which tracks the performance of the banking sector, also experienced a substantial decline of more than 1,500 points, touching an intraday low of 49,409.
Indian Lok Sabha Elections 2024
The primary driver behind this sharp market correction was the divergence between the early trends of the Lok Sabha election results and the expectations set by the exit polls. According to the passage, the stock market investors were disappointed by the early indications of the election outcomes, which were not in sync with the predictions made by the exit polls.
Avinash Gorakshkar, the Head of Research at Profitmart Securities, provided further insights into the market’s reaction. He stated that this sudden and steep fall in the Indian stock market was predominantly due to the surprising and disappointing early trends in the Lok Sabha election results. Gorakshkar emphasized that this trend was definitely not in line with the exit poll projections, which had set certain expectations among the investors.
The unexpected election results have created a sense of panic in the market, according to Gorakshkar. However, he cautioned that these were still early trends, and the full picture would become clearer in the next one to two hours. To manage the volatile market conditions, Gorakshkar advised investors to maintain a “strict stop loss” strategy, which is a risk management technique where a stock is automatically sold if it drops to a specific price.
India VIX Index hits 52-week high
Sumeet Bagadia, the Executive Director at Choice Broking, further highlighted the heightened volatility in the market. The India VIX index, which serves as a barometer of market volatility, surged to a 52-week high of 26.32 in the early trading session. Bagadia expects the volatility to continue in the near term and provided support levels for the Nifty, Sensex, and Bank Nifty indices at 22,400, 48,500, and 73,700, respectively.
The passage emphasizes the significant impact that the Lok Sabha election results have had on the Indian stock market, leading to a sharp market correction and a spike in volatility. Investors are advised to closely monitor the market conditions and employ appropriate risk management strategies, such as using strict stop-loss levels, to navigate the volatile trading environment.
