Indian stock markets have experienced high volatility in the last couple of days amidst factors that are impacting the bourses to trade in the negative territory
Devang Shah, Head, Retail Research, Asit C. Mehta Investment Interrmediates Ltd says the Medium-term Outlook for the Market looks Positive from an Investment perspective. One should buy stock specific in such kind of correction & Consolidation.
Shah highlights 5 top Reasons for Market Volatility & Correction in Month of May
During the earning season, the market remains volatile. The market is currently facing stock specific volatility with respect to earnings expectations.
Before any elections or any major events, there are usually spikes in the VIX, which is almost 100% shoot up in last one month & trading around 20.60 levels. This increase in volatility results from profit-taking activities ahead of upcoming elections.
Examples of global geopolitical tensions include conflicts such as Israel-Hamas clash which affects the international trade and supply chain disruption. The tensions ongoing are creating more market volatility and adjustments.
Federal Reserve’s recent monetary meeting hinted at longer lasting higher interest rates going for prolonged period of time. This expectation contrasts with the markets’ expectation for an early rate cut and also raised fear of economic lowdown, influencing near term market movements.
Foreign Institution Investors (FIIs) remained net seller in cash market for this month so far ahead of general election in India. Besides FIIs also buildup short positions in index futures as short term caution ahead of General election event will keep market in corrective mode with high volatility in near term.