Indian stock market erased all morning gains to close in the red amid expiry day-led volatility on Thursday, with Sensex and Nifty slipping around 1% each from their intraday highs amid rising bond yields, FII selling and more.At close, Sensex was down 135 points at 75,183, and Nifty 50 was down over 4 points to 23,655. This came even as India VIX, which measures volatility in markets, declined over 3% to 17.82 by the end of the session.Bajaj Finance shares were the top losers on Sensex, falling nearly 2%. Infosys, Tech Mahindra, Hindustan Unilever, Bajaj Finserv, Bharti Airtel, NTPC and others followed, dropping up to 1.6%. Bucking the trend, IndiGo shares jumped over 3% to lead gains, followed by Trent, Bharat Electronics, Adani Ports and others.Smallcaps outperformed benchmarks, with the Nifty Smallcap 100 index bucking the trend to close 0.6% higher. The Nifty Midcap 100 index, meanwhile, declined 0.04%. Sectorally, Nifty Financial Services, excluding banks, dropped 0.6% while Nifty Cement gained over 2%.What lies ahead?The Indian market saw a highly volatile trading session, with benchmark indices managing to make some recovery following steep intraday falls, but eventually closing on the negative side amid worries over geopolitical issues and expiry-related volatility, said Vikram Kasat, Head of Advisory at PL Capital.“Even though there were pressures on frontline indices, buying support from defensive stocks and other sectors ensured that losses were moderated. Investors also paid attention to external cues such as the U.S.-Iran issue and crude oil prices. Going forward, the near-term market trajectory is likely to be driven by geopolitical developments, crude oil trends, FII flows, and domestic macroeconomic data, with volatility expected to stay elevated,” the analyst added.Bond yields riseBond yields resumed climbing after having sharply cooled down overnight. As the US dollar declined from a six-week high and oil prices dropped around 6%, the yield on benchmark US 10-year notes fell 9.4 basis points on Wednesday. However, the yield rose 1 basis point to 4,578% today.FII sellingForeign investors remained net sellers of Indian equities for the second consecutive session on Wednesday, selling shares worth Rs 1,597 crore on Dalal Street. This comes after a three-session buying streak during which FII bought Indian shares worth Rs 5,240 crore. Foreign investors have mostly remained bearish on Indian markets this month so far, remaining net sellers of Indian equities in nine out of 13 sessions so far in May.Oil prices cool down below $105/barrelOil prices cooled down, with Brent crude futures declining around 1% to trade near $104 per barrel while WTI Crude fell over 0.5% to near $98 per barrel. Oil prices have sharply fallen in two days, after remaining above $110 per barrel earlier this week. The drop in oil prices comes after US President Donald Trump said negotiations with Iran were in the final stages, but he also threatened further attacks if Iran did not agree to a peace deal. Brent crude futures were hovering at nearly $106 per barrel on Thursday morning."The sharp drop in oil prices appears to be pricing in the possibility of a breakthrough in the ⁠talks," said ‌Reuters, quoting Yang An, analyst at Haitong Futures, as saying. "However, if Trump insists on making no concessions to Iran, an agreement seems unlikely, and the outcome of the negotiations could reverse sharply," ⁠he added.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)