Markets continue to remain choppy, volatile

The May 30-June 5 period under review saw a huge jump post exit polls and a sharp dip after election results were announced. This unprecedented movement over two days made the week even more volatile than one would have expected. At the end of it all, BSE Sensex lost 120.66 points or 0.16 per cent to close at 74,382.24 points, while Nifty lost 84.35 points or 0.37 per cent to close at 22,620.35 points. Markets gained on three of the five trading sessions and lost on two.

Dow Jones lost in three of the five sessions. It gained two. Dow was down 141.57 points or 0.36 per cent to close at 38,711.29 points.

The week saw June futures expire on Thursday. At the end of the previous period, the series was up. Nifty surrendered all of the gains and closed with losses of 81.70 points or 0.36 per cent to close at 22,488.65 points.

Let us now come to the eventful exit polls and the aftermath in which the BJP-led NDA failed to get an absolute majority on its own. Monday (June 3) saw markets record their best performance in recent times with Nifty gaining 733.20 points on the back of exit polls for the general elections 2024 where the pollsters in a ‘poll of polls’ gave the ruling NDA around 360-370 seats. The high on Nifty was at 23,338.70 points. Nifty closed at 23,263.90 points. On BSE Sensex the gain was at 2,507.47 points to close at 76,738.89 points. The high for the day was at 76,468.78 points. These incidentally were new lifetime highs at closing and intraday levels.

On Tuesday (June 4), it was a reversal and terrifying and scary one. The lows made on BSE Sensex were at 70,234.43 points and at 21,281.45 points on Nifty. The intraday point fall on BSE Sensex was roughly 6,200 points and 2,000 points on Nifty. What caused it? Simply the fact that the NDA fell short at below 300 seats at about 293 seats. The final closing on Tuesday was BSE Sensex down 4,389.73 points to close at 72,079.05 points, while Nifty lost 1,335.70 points at 21,928.20 points. On a net basis, the two days of exit polls and election results saw Nifty lose 646.20 points and BSE-Sensex 1,882.26 points. It’s only because one looks at the froth which got added on Monday which in any case seemed unrealistic, that the fall gets exacerbated.

Shares of Awfis Space Solutions, which had issued shares at Rs383 listed on the bourses on Thursday (May 30). Shares closed day one at Rs419.10, a gain of Rs36.10 or 9.42 per cent. On Wednesday, the share kept on oscillating and finally closed at Rs413, a reduced gain of Rs30 or 7.83 per cent.

The 3rd term of Prime Minister Modi would see him and his cabinet being sworn in on Saturday (June 8). This would ensure that all combinations and cross combinations would stop once the swearing in happens, at least for the time being. Once the Cabinet and the allocation of portfolios are announced markets would begin to settle down in the medium term. Coming to the June 6-12 period, there would be volatility in both directions as the government formation takes place and things begin to settle down. For the next three to six months the highs made on Monday (June 3) and the lows made on (June 4) would act as strong resistances and supports. The high on Nifty was at 23,338.70 points, while it was at 76,468.78 points on BSE Sensex. The lows were at 70,234.43 points and at 21,281.45 points respectively. There has been stability on Wednesday and more would follow, but markets would continue to remain choppy and volatile. Trade cautiously.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)