Benchmarks fall for third day amid poll jitters; Vix hits fresh 2-year high

Indian equities have been jittery amidst the ongoing elections and selling by foreign portfolio investors

Indian equity benchmarks ended with losses for the third consecutive day amid elevated volatility ahead of the Lok Sabha election results on June 4. 

The benchmark Sensex ended the session at 75,171, with a decline of 220 points or 0.3 per cent, while the Nifty 50 index ended the session at 22,888, with a drop of 44 points or 0.2 per cent. The India VIX, a gauge of market volatility, rose 4.32 per cent to end at a fresh two-year high of 24.2.

The broader index saw a steeper fall amid profit booking. The Nifty Midcap 100 snapped its 12-day winning streak and ended the session at 52,295, a decline of 0.9 per cent.

During its 12-day gaining run, the index had gained 7.4 per cent. The Nifty Smallcap 100 index closed at 16,876, declining 0.8 per cent. 

Indian equities have been jittery amid the ongoing elections and selling by foreign portfolio investors (FPIs).

Investors are concerned about the margin of victory of the ruling national democratic alliance (NDA) and are booking profits amidst concerns about policy continuity.

The lower turnout in the elections had raised concerns about how voter fatigue may impact the outcome.

Analysts said any outcome, which could affect the NDA government to continue with its policies could disappoint markets.

"As the market approaches the election outcome, The uncertainty-led volatility is likely to continue. However, the underlying earnings growth for the March quarter results so far was largely above expectations, which could support the valuation, currently moderately above the long-term average,' said Vinod Nair, head of research at Geojit Financial Services.

The market breadth was weak, with 2,594 stocks declining and 1,236 advancing. FPIs were net buyers of Rs 65 crore on Tuesday, while domestic institutions bought shares worth Rs 3,232 crore.

"Nervousness ahead of the election results is rising, as evidenced by the poor advance-decline ratio and falling volumes. The Nifty could stay in the 22,795-23,111 band for the near term,” said Deepak Jasani, head of retail research of HDFC Securities.