Sensex Choppy Ahead of Poll Verdict; Nifty Holds 6,650

Indian stock markets traded flat on Friday amid increased volatility as investors brace for the electoral verdict next week. The BSE Sensex traded 0.2 per cent higher and the Nifty index held on to the key 6,650 levels, rising over 10 points in morning trade.

"Market is preparing for the election outcome. We can see selective profit-taking and selective position building. Market continues to trade cautious and we will see a definitive directional move after the election outcome," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.

The NSE volatility index rose over 4 per cent to an intraday high of 35.86, not far from its 52-week high of 38.04. The volatility index is often referred to as the fear index or the fear gauge because as it rises, market participants need to become more proactive and careful about their portfolios.

And that's exactly what analysts are suggesting ahead of the big event next week. Elections will end on May 12, post which exit poll results will be announced. Indian markets, which have run up to record highs on hopes of a stable government post elections, will start reacting sharply from May 13. Results will be announced on May 16.

Ambareesh Baliga of Edelweiss Global told NDTV that investors who have bought shares in the last couple of months, should book partial profits ahead of the uncertain event on May 16.

Meanwhile, overseas investors continued to buy shares in the cash market. FIIs bought shares worth Rs 363 crore yesterday, while domestic investors sold shares worth Rs 120 crore. Overseas investors, however, have been selling index futures to hedge for uncertainty.

Banking stocks continues to gain ahead of election results. The Bank Nifty is up 1.75 per cent over the last week, having gained over 27 per cent in the last 3 months.

On the Nifty, Tata Power, Hindalco, BHEL and Coal India traded with 1-1.7 per cent gains. ONGC, Dr Reddy's and BPCL were the top three Nifty losers.

As of 09.33 a.m., the Sensex traded 37 points higher at 22,381, while the Nifty was up 11 points at 6,671.