Sensex Slips 550 Points from Day’s High, Nifty Below 24,850 as Market Volatility Rises

Indian stock markets witnessed a volatile trading session on May 21, with the Sensex and Nifty giving up strong morning gains due to pressure in financial and metal stocks.

By noon, the Sensex was up 249 points at 81,435, while the Nifty traded at 24,753, both significantly off their early highs. The India VIX, commonly referred to as the “fear gauge”, surged by 3%, signalling growing caution among investors.

Despite early enthusiasm, profit booking and sectoral weakness dragged markets down from the day’s peak.

Mixed Performance Across Sectors

The market breadth remained negative, with 1,735 stocks declining against 1,607 advancing and 125 remaining unchanged. Broader markets showed mixed signals, as midcap stocks outperformed smallcaps, which came under selling pressure.

On the sectoral front:

• Nifty Pharma led the gains, supported by strong earnings from Torrent Pharma and Aster DM Healthcare.

• A rise in Covid-19 cases in Mumbai also pushed investor interest toward healthcare stocks.

• Nifty Realty gained around 1%, with stocks like DLF, Macrotech Developers, Godrej Properties, and Oberoi Realty driving the rally.

However, not all sectors fared well:

• The Bank Nifty extended its decline, weighed down by losses in SBI, Kotak Mahindra Bank, and Axis Bank.

• Metal stocks also remained under pressure, contributing to the overall weakness in the market.

Market Analysts Expect Healthy Retracement

According to analysts at ICICI Securities, Nifty is currently undergoing a healthy retracement after last week’s strong rally. They highlighted that “shallow corrections and extended rallies indicate a strong price structure.”

ICICI Securities expects Nifty to reach the 25,500 mark in the coming months, with strong support at 24,200, suggesting current dips could be buying opportunities.

FII Outflows Seen as Temporary

Foreign institutional investors (FIIs) recorded their biggest outflows in over two months the previous day. However, market expert Sunil Subramaniam stated that this is not a major concern.

“FIIs are merely booking profits due to stretched valuations. This phase is temporary and will likely reverse soon,” he said.

Volatility Returns Amid Uncertainty

The 3% spike in the India VIX highlights renewed volatility in the market, possibly due to global cues, sectoral rotation, and cautious investor sentiment ahead of key events.

As traders and investors continue to monitor movements in Sensex and Nifty, the markets remain sensitive to both domestic and global triggers.