Benchmark stock market indices opened lower on Monday, dragged by a decline in IT stocks after having witnessed a very volatile session on Friday when it recovered after having lost nearly 1,200 points.
The S&P BSE Sensex was down 279.70 points to 81,853.42, while the NSE Nifty50 lost 74 points to 24,694.30 as of 9:35 AM. Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that the excessive volatility witnessed on Friday is a reflection of the sharp differences in perceptions about the near-term market trend.
“The huge positions in F&O segments are causing such heightened volatility in the market. The 500 point move in the nifty from the day’s trough to the peak indicates massive short covering,” he added.
While FIIs turning buyers in December, so far, after the relentless selling in the previous two months is positive, investors should not assume that the FIIs will continue to buy. Strong dollar and high bond yields in the US are headwinds for capital flows.
Slowdown in GDP growth and stagnant earnings growth are hurdles in the path of the bull. A rally will sustain only if the data regarding growth and earnings show recovery. This will take some time.