FIRST TRADE: Sensex, Nifty open flat, mid and small-cap indices in the red; Shriram Finance gains over 2%

Stock market today: It was a quiet opening for the domestic equity market on Thursday, February 29. The trading is expected to be volatile today given the monthly expiry of the F&O series. In the opening deals, the S&P BSE Sensex traded 32 points, or 0.04 per cent lower at 72,272.92 levels, while the NSE Nifty was hovering around 22,000 levels, down 33 points, or 0.15 per cent.

Shriram Finance gained over 2 per cent after the NSE announced last evening that the company would replace UPL in the Nifty50 index. 

The market has suddenly turned unpredictable amidst high volatility. Resistance has become strong at the Nifty 22,200 level. The cut in Nifty by more than 1 per cent yesterday, despite the FII selling getting neutralised by DII buying, is significant. This is due to the rebalancing of the positions a day ahead of the monthly expiry. The volatility will continue today, too, being the last day of the monthly expiry. Investors may wait for the volatility to subside, notes Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

The broader market was in the red after AMFI yesterday, via a letter, asked fund managers to moderate inflows into small and mid-cap funds and protect investors from large outflows after strong inflows raised concerns of a potential crash. READ MORE

The S&P BSE MidCap index was trading 0.70 per cent lower at 38,744.75 levels, while the S&P BSE SmallCap index traded 0.89 per cent lower at 44,598.82 levels. 

"A significant development is the communication from SEBI to AMFI suggesting that mutual funds set up a framework for protecting investors in mid- and small-cap funds. Sustained flows of retail money into these funds have made their valuations excessive and difficult to sustain. More mid- and small-cap funds are likely to impose restrictions on lump-sum investments in the mid-and small-cap schemes. This will benefit the large caps, which are relatively valued now. The correction in the broader market is likely to continue," the expert added.