In a market segment with its ear to the ground, apprehension is rising
In sections of the stock market known to read the tea leaves correctly, fear has set in just days ahead of the last leg of voting and exit polls. Retail and wealthy investors have voted with their feet in the last couple of months, snapping up Nifty and Bank Nifty futures contracts as they bet on a solid victory for the Narendra Modi government. But in just a fortnight, they have got rid of most of these contracts, likely anticipating a different outcome.
The action of retail and high networth investors (HNIs)—called Client by NSE— is closely tracked in market circles, as they tend to be on top of foreign investors in anticipating market movements. The seventh and last phase of Lok Sabha election will be held on Saturday, and exit poll results are expected later in the same day. Votes will be counted and results announced on Tuesday, 4 June.
The Client category's bullish bets on Nifty and Bank Nifty futures contracts are down to a sixth, exchange data showed. From a cumulative net bullish position of 283,565 contracts on 15 May, they held just 45,795 bullish contracts on 28 May. Interestingly, FIIs who held cumulative net bearish bets of 25,9616 contracts on 16 May, turned net bullish by 47,459 contracts.
“While the market body language has been very strong, as we still trade near record highs, a bit of apprehension seems to have set in ahead of the big day," said Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services, defining the market mood. “It’s like an IPL or an Indo-Pak match. Nobody knows who will win until the last ball is bowled." On Wednesday, the Sensex and Nifty fell nearly 1% each, continuing their losing streak for the fourth day running.
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