Nifty 50 tumbles over 600 points in 4 sessions on heightened volatility, down 1.65% in May so far

Against this backdrop, the Nifty 50 index has witnessed a notable decline of nearly 360 points over the past three trading sessions. From its peak of 22,794 points reached on May 3rd, the index has plummeted by nearly 500 points.

Up to this point in the current month, the Nifty has experienced a decline of 1.65%, marking the most significant monthly drop since October 2023. Despite this downturn, the index maintains a year-to-date return of 2.30% for 2024.

Also Read: Nifty 50 falls for 3rd session in a row; investors lose nearly ₹5 lakh crore

This downward trajectory continued into the fourth consecutive trading session on Wednesday, with the Nifty 50 shedding another 0.52%, or 117 points, hitting an intraday low of 22,185 points. Taking today’s low into account, the Nifty 50 has dropped 609 points. 

On the other hand, Sensex also recorded a decline of 438 points in today’s trade, reaching an intraday low of 73,073 points. Over the course of the last three sessions, the Sensex has shed a total of 1,100 points.

Also Read: Q4 results today: L&T, Tata Power, BSE, TVS Motor, Hero Motocorp, and Canara Bank to report Q4 earnings on May 8

During the recent sell-off, mid- and small-cap stocks bore the brunt of the downturn, experiencing significant selling pressure. The Nifty Midcap 100 index witnessed a decline of 3% over the past three sessions, while the Small Cap 100 index plummeted nearly 4% during the same period.

Foreign portfolio investors sold Indian shares worth ₹3,668.84 crore on Tuesday, while domestic institutional investors bought a net of ₹2,304 crore in stocks, Trendlyne data showed. FPIs have been sellers in 20 of the last 25 sessions.

Also Read: FPIs turn net sellers worth ₹8,671 crore in April after 2 months of buying

On the other hand, India’s volatility index rose by as much as 7.7% to 18.32, hitting a 15-month high for the third session in a row on Wednesday. 

Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The India VIX has spiked 72% from the April lows, indicating that high volatility will persist for some more time. It is important to understand that VIX is based on Nifty index options prices.”

“The spike in VIX is due to the rising volume of options trades. Many investors are buying put options to protect their portfolio in case of an unexpected election outcome,” he added. 

Analysts anticipate increased intraday volatility to persist until the outcome of the election results on June 4. According to Motilal Oswal, the Nifty has immediate support at 22,100 and then 22,000 zones, with resistance at 22,450 and then 22,550 zones. 

Currently, it must maintain a key support level of 22,222 zones to potentially move upwards towards 22,450 and then 22,550 zones. Conversely, a hold below 22,222 could lead to a downside towards 22,100 and 22,000 zones, it added.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 08 May 2024, 12:08 PM IST