LS polls: NDA’s ‘poor’ performance washes out Rs. 40 lakh crore in Indian stocks
Virendra Pandit
New Delhi: A day after Indian and foreign investors enriched themselves with Rs. 12.68 lakh crore, expecting a bonanza for the economic reforms-friendly Narendra Modi government’s return to power for a third straight term, they lost more than thrice that amount within 24 hours!
The ruling NDA’s less-than-expected performance in the just-concluded Lok Sabha elections, whose results were declared on Tuesday, was strongly reflected in the Indian stock markets where investors lost a whopping Rs. 40 lakh crore (INR 4 trillion) in a single day.
The poll result day proved a disaster for the market which witnessed the worst session in four years as the NDA’s leads narrowed. The volatility index jumped to its highest since February 2022 at 31.71, analysts said.
As early trends began to pour in on Tuesday morning, the equity market started reacting negatively. It posted its worst session in more than four years as voting trends on election results day showed the NDA, led by Prime Minister Narendra Modi, falling short of a predicted landslide victory.
While the ruling alliance will still likely form the government, analysts said the NDA’s dominant Bharatiya Janata Party winning fewer seats than expected could prevent the government from pursuing an aggressive reform agenda in a country that expects to become the world’s third-largest economy in the next few years.
The NSE Nifty 50 index was down 5.3 percent at 22,024 points as of 2:45 pm, and the S&P BSE Sensex fell 5.2 percent to 72,443.
The indexes fell as much as 8.5 percent earlier in the day, after hitting record highs on Monday.
TV news channels showed the ruling NDA ahead in nearly 293 seats—way below the 350-mark most exit and opinion polls predicted—while the INDIA alliance of opposition parties, led by the Congress, was ahead in more than 220 seats. A ruling party or alliance must have at least 272 seats in the Lok Sabha for a simple majority in the 543-member Lower House of Parliament.
Traders said that selling by high-frequency traders accelerated the drop and the sharp fall triggered margin calls.
All sectors except consumer goods were in the red.
Banks fell 7.5 percent, realty dropped 9.4 percent, infrastructure declined 10.2 percent, while oil and gas stocks slumped 11.7 percent and state-run companies and public-sector banks tumbled 19 per cent and 18 percent, respectively.
The small-cap and mid-cap traded nearly 8 percent lower each.
State-run companies saw their worst day ever, while banks, finance, infrastructure, realty, energy and mid-cap stocks saw their worst session since March 2020.
Adani Enterprises and Adani Ports sank 18 percent and 19 percent respectively, and were the worst losers among Nifty 50 stocks. Other Adani group stocks were down between 9 percent and18 percent.
The group stocks had jumped between 4 percent and 18 per cent only on Monday after the exit polls which predicted a landslide victory for the NDA.
