Amid the continuing volatility in the stock markets, for which the ongoing Lok Sabha elections are among the contributing factors, Union Home Minister Amit Shah appeared to be predicting that the markets will witness a major bull run post the election results.
Shah, when asked about the recent stock market correction and the rumours that Dalal Street is responding to the possible poor performance of the BJP, had suggested that after June 4, when the Lok Sabha results are announced, the markets will shoot up. "Stock market crashes should not be linked with elections, but even if such a rumour has been spread, I suggest that you buy (shares) before June 4. It will shoot up," the home minister was quoted as saying.
However, high volatility was seen on Monday as well, with Sensex declining 798.46 points or 1.09 per cent to hit a low of 71,866.01 in day trade, only to make a dramatic rebound after fag-end buying. Stock markets ended the day higher by 111.66 points or 0.15 per cent.
Rebounding from an intra-day low of 21,821.05, Nifty closed the day at 22,104.05.
Foreign Institutional Investors (FIIs) sold equities worth Rs 4,498.92 crore on Monday, according to exchange data.
Volatility persisted on Tuesday with benchmark indices climbing in early trade only to retreat and trade flat after giving up the early gains as investors remained cautious despite the sharp bounce-back on Monday.
India VIX, also called the fear index, the volatility index that measures the market's expectation of volatility based on NIFTY Index Option prices, crossed the 20-mark, suggesting further expectations of increased volatility. The volatility index witnessed a 67 per cent rally in the past one month from 10.20-mark on April 23 to 21.11 on Tuesday (May 14).
According to market experts, it is not the uncertainty over the number of seats that the BJP will get in the ongoing elections that is driving India Vix higher, but rising US Treasury yield and the tensions in the Middle East. Nonetheless, they also fear that the markets may be in for a rude shock and resultant sell-off if the BJP sees its seats coming below the 300 mark.
