Volatility in the Indian stock market decreased in the second half of the year

As far as ups and downs are concerned, calendar year 2022 has proved to be the opposite. If the first half of the year was more turbulent, the second half of the year has been softer in this regard. During the first six months of the year, the Sensex rose or fell more than one percent from its previous close in 55 trading sessions. In comparison, this happened in only 22 trading sessions in the second half of the year. Analysts say the improvement in foreign portfolio investor inflows and the market's recovery from June lows this year have eased investor concerns.

The year began with volatility due to global factors such as the tightening stance by the US Federal Reserve, the resurgence of Covid-19 in China and Russia's invasion of Ukraine. During the first half of the year, the Sensex saw a volatility of almost one per cent on a daily basis. While during the second half of the year, the Sensex registered only one in five such movements, indicating a reduction in market volatility during the period. Global markets such as the US and China also reported similar volatility during the second half of the year.

Similar volatility was recorded in global markets like the US and China. The US Dow Jones saw volatility of more than 1 percent in 52 trading sessions during the first half of the year. And so far 46 trading sessions have witnessed such a change during the second half of the year. Reduced volatility has also helped domestic markets outperform many global competitors. The Sensex gained 17 percent during the second half, while the Dow gained 8.9 percent. Analysts say the biggest driving factor in the market this year has been the investment pattern of foreign portfolio investors. Between January and June, global investors sold Rs 2.2 lakh crore from the domestic equity market. At the same time, between July and December, it invested Rs 90,000 crore.