Why is Sensex, Nifty volatile today? Sensex sheds 200 points, then covers losses

Monday morning on May 19 saw Indian equity benchmark indices Sensex and Nifty slip in early trade. Weak Asian market trends added to continued profit-taking in IT stocks. What followed was a spike to recover the losses, adding to the volatility.

Shortly after the opening bell, the 30-pack Sensex shed more than 214 points to 82,116, while the Nifty lost 54 points to go below the 25,000-mark (24,965 points). Both indices recovered in later morning trade—trading flat as it approached the afternoon session.

Among the BSE benchmark index, Infosys, Eternal, and TCS led the laggards in the early morning, with IndusInd Bank, HCL Tech, Reliance Industries, Tech Mahindra, and Mahindra and Mahindra adding to the losses.

In the morning, NTPC, Asian Paints, Bajaj Finance, and Hindustan Unilever gained.

Among the major Asian markets, South Korean, Japanese, Chinese, and Hong Kong indices traded in the red.

This came at the heels of an impressive last week in India where the Sensex gained 0.64 per cent or over 524 points and NSE Nifty racked in more than 425 points (up 1.73 per cent) in the last five trading days.

However, Friday saw the Sensex fall by 200 points (or 0.24 per cent) and the Nifty slipping 42 points (or 0.17 per cent) as investors took to profit-taking a day after both indices hit a seven-month high on May 15.

This happened despite foreign institutional investors (FIIs) buying ₹8,831.05 crore worth of equities on Friday. V.K. Vijayakumar of Geojit Investments noted this movement, stating: “An apparently perplexing trend from the last trading day is that the market declined despite ₹14,018 crore of institutional buying.”

“This indicates that FIIs are increasing their short positions in the derivatives market. So expect more volatility ahead,” remarked Vijayakumar.

Despite Moody’s downgrading the US investment credit rating, US markets ended on a high on Friday. The silver lining, however, came in the form of the rupee appreciating by 16 paise to 85.41 versus the US dollar in early trade on Monday.

Oversupply concerns surrounding Brent crude, impending results of US-Iran nuclear deal talks, and the much-awaited government factory data from China, added to the greenback currency trading lower.

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