Stock Market Today: Broader market indices snapped their 6-day winning streak on May 20 after surging over 9 per cent during the rally. The key broader indices – Nifty Midcap 100 and Nifty Smallcap 100, which captures the movement of the midcap and smallcap segment of the market, traded in the red in early trade today.
After opening with gap-ups, both the indices pared initial gains to slip into red. As of 12:30 PM, the Nifty Midcap 100 traded around 0.5 per cent lower and the Nifty Smallcap 100 traded flat, however, with a negative bias.
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The Nifty 500 index, which represents about 92.29 per cent of the free float market capitalisation of the stocks listed on the NSE, too traded lower in the range 0.5 per cent to 1 per cent.
What Triggered The 6-Day Rally
The ceasefire between India and Pakistan, after four days of intense cross-border clashes, brought a sense of stability to the markets by easing investor concerns over the risk of a potential all-out war between the two nuclear-armed neighbours.
Earlier, markets had been pricing in the heightened uncertainty following the tragic terrorist attacks in Pahalgam, Kashmir, on April 22, which claimed 26 innocent lives. Later, in retaliation, Indian armed forces carried out precision military strikes on nine terrorist hideouts across Pakistan and Pakistan-occupied Kashmir on the intervening nights of May 6 and May 7.
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What followed next was four continuous days of intense cross-border firing, shelling, and deadly drone attacks between the two nations' armed forces.
The announcement of a ceasefire on May 10 helped restore investor confidence and sparked a sharp rally in the markets.
Why The Overall Market Is Under Pressure
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that the recent credit rating downgrade of Moody's in the United States has added a layer of unease to global financial markets.
While it may not pose an immediate threat, the downgrade has created a sense of uncertainty and concern about possible ripple effects from unforeseen developments, he explained.
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What Should Investors Do
In the near term, Vijayakumar said the market is likely to enter a consolidation phase. With valuations running high, any upside may be limited, especially as institutional investors could use the opportunity to book profits.
He suggested that investors take a cautious stance for now—considering a strategy of selling during rallies and buying on dips.
