The stock market indices, Sensex and Nifty 50, opened cautiously on Wednesday, with the Nifty 50 index gaining 20 points to 22,549.70 from the previous close of 22,529.05, and the Sensex rising by 91 points to 74,044.53 after closing at 73,953.31 on Tuesday. Experts attribute this cautious optimism to the balancing effect of Domestic Institutional Investors' (DII) buying activities offsetting Foreign Institutional Investors' (FII) selling.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that institutional activity this month shows no excessive concern regarding potential election result jitters. He highlighted that net institutional selling is nearly neutral, with FII selling amounting to Rs 37,500 crores being almost balanced by DII buying of Rs 37,369 crores. Vijayakumar pointed out that the FII selling was triggered by the outperformance of Chinese stocks, prompting FIIs to sell in the expensive Indian market and buy in the cheaper Hong Kong market. This indicates that institutional activity does not reflect election-related concerns.
Vijayakumar also suggested that the market is likely to react to the election outcome before June 4th. He advised investors to consider buying stocks ahead of the results, focusing on large-cap stocks that are fairly valued compared to the broader market, where valuations are much higher. He noted the possibility of both FIIs and DIIs turning into buyers around the election results time, potentially lifting large caps and the indices to higher levels.
The Volatility Index has declined by 9 percent recently, indicating a return of stability in the market.
At the time of reporting, within the Nifty 50 index, 22 stocks were trading in advance, 26 were in decline, and 2 remained unchanged. The top gainers in the Nifty 50 list included Coal India, Hindustan Unilever, Britannia, Reliance, and UltraTech Cement, while the top losers were Hindalco, Shriram Finance, Sun Pharma, JSW Steel, and Tata Steel.
On Wednesday's trading session, a total of 2,505 stocks opened for trading, with 1,152 trading with gains, 1,230 declining, and 123 remaining unchanged.
In Asia, stocks slipped following the S&P 500 hitting another record ahead of Nvidia Corp.'s earnings. Shares in Japan and South Korea opened lower, while Australia's benchmark climbed. Experts suggest Nvidia's performance is crucial in gauging the sustainability of the bull market, with its revenue expected to benefit from high demand in its data-center business.
Investors are also monitoring the Federal Reserve's latest meeting minutes, which are set to be released today. In the commodity market, gold, silver, and copper consolidated near recent highs, while oil slipped on reports of increased stockpiles.
On Tuesday, domestic equity indices ended a cautious session flat. The Sensex fell 52.63 points to close at 73,953.31, while the Nifty 50 rose 27.05 points, or 0.12%, to 22,529.05. The Nifty 50 formed a bullish engulfing candlestick pattern with good volume on the daily chart, indicating strength.
