Benchmark indices Sensex and Nifty traded lower for the fifth straight day on Thursday as investors booked profits and chose to stay cautious ahead of the Lok Sabha election results on June 4.
Sensex dropped over 0.60 per cent and Nifty nearly 0.70 per cent on Thursday, with Tata Steel being the biggest laggard. Shriram Finance, Titan, Nestle, Power Grid and Bajaj Finserv too declined.
India VIX—also known as the Fear Index—the volatility index that measures the market's expectation of volatility, rose to over 24 on Thursday, despite global rating agency S&P revising its India outlook from to positive from stable.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,841.84 crore on Wednesday, according to exchange data. Analysts said stock markets are witnessing 'buying on dips and sell on rallies' amid uncertainty ahead of the general poll results.
V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, said the markets will continue to see heightened volatility on June 3 and 4 as well.
The last phase of polling for the ongoing general elections is scheduled for June 1 and the results will be declared on June 4.
"If the exit polls indicate a clear trend, which is favourable from the market perspective, buying decisions will be easy even after a spike in prices," news agency PTI quoted Vijayakumar as saying.
"The highly valued mid and smallcaps remaining resilient and the fairly valued largecaps turning weak is a short-term aberration. Long-term investors can profit from this temporary aberration," he said.
Independent market analyst Ambareesh Baliga has been quoted as saying that the markets will rally if the NDA wins over 380 seats.
"However, if they secure only 320-330 seats or fewer, a correction is expected," Moneycontrol quoted him as saying.
