Sensex, Nifty Start in Red: Amid Election Realities, Market Eyes Consolidation and Correction

The Indian stock markets are expected to remain in a consolidation phase following an opening dip today, driven by concerns about a lower voter turnout and the potential for a weaker victory by the NDA. As of 9:25 AM IST, the BSE Sensex had fallen by 100 points, or 0.1%, to 73,407, and the NSE Nifty 50 was down 24 points at 22,278.

“There is a bias of profit-taking in the market for the next few trading sessions. While the Street is expecting political continuity (with NDA retaining power), the low turnout is posing a risk,” Nirav Karkera, Head of Research at Fisdom, told Moneycontrol. He added that the market is worried about a hung Parliament.

Global markets showed no significant reaction to comments from Neel Kashkari, President of the Minneapolis Federal Reserve, on May 7. Kashkari mentioned that, due to stagnant inflation and a strong housing market, the Fed might contemplate maintaining current interest rates throughout the year.

Vinay Rajani, CMT, Senior Technical & Derivative Analyst, HDFC Securities, says, “Overall, the market is in consolidation in a range between 22,800 and 22,200. We are passing through the result season and historically, in the result season, the market does not move in one direction. Rather it oscillates in the range. So that is what we are expecting. After falling for the last three trading sessions, 22,150 to 22,200 should act as a strong support and stock and sector-specific move will be there. The FMCG sector took a lead today and that will definitely continue.”

“After falling for the last three trading sessions, I believe that 22,150 to 22,200 should act as a strong support and stock-specific, sector-specific move will be there. The FMCG sector took a lead today and that will definitely continue. So, I am not seeing across-the-board panic selling in the market from here on after the three days correction. 22,150 is a very strong support, which happens to be the 61.8% retracement and with that stop loss one can remain long in the market but we have to select the right stocks. So, overall, FMCG stocks can do well," Rajani adds.

Gurmeet Chadha of Complete Circle Consultants says, “People are getting careful before the June 4 outcome of the election. People have made good money in the last 12-18 months. So, family offices and HNIs want to keep some powder dry for the event. The second reason is a little technical with 10-year yields in the US rising and then coming off a little bit. As long as they remain above 4.5%, it creates a bit of a pressure in terms of hot money moving in and out.”

Chadha advises caution before the elections, pointing to US yields, and recommends robust earnings as a hedge. He expressed a positive outlook on Britannia, Tata Consumer, Axis Bank, and ICICI Bank due to their performance. In the banking sector, he favors ICICI Bank, Axis Bank, HDFC Bank, and Kotak Mahindra Bank, citing their growth potential and asset quality.