New Delhi, Jan 2 (IANS): Equity benchmarks sank on Tuesday with selling emerging at higher levels.

BSE Sensex was down 559 points at 71,712 as heavyweight stocks came under selling pressure.

Ultratech Cement was down more than 3 per cent, M&M, L&T, Wipro were down by more than 2 per cent.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said an important trend to watch is the spike in the volatility index VIX to 14.5 which indicates that high volatility is round the corner. Monday’s sell off in the last 30 minutes is a warning that at higher levels there can be bouts of big selling.

The 1000 point rally in the Nifty in the last one month has imparted momentum to the market.

Retail investors encouraged by the excellent returns of 2023 have turned exuberant and are chasing stocks, unmindful of the high valuations, particularly in the mid and small-cap segments. Investors should not fall into the trap of ‘recency bias’ and chase low grade stocks in the broader market, he said.

Declining dollar and US bond yields provide a favourable global context for equities. FII inflows in 2024 are likely to be huge and have the potential to lift high quality large-caps, particularly in segments like banking where valuations are fair, he added.