BSE-listed companies have witnessed a market capitalisation decline exceeding Rs 30 lakh crore following indications that the NDA-led government may not meet the expectations set by exit polls.
Till the time of market closing, the NDA, under the leadership of PM Narendra Modi, held the lead on 295 seats, whereas the I.N.D.I.A alliance was leading on 232 seats.
In the biggest single-day fall in four years, benchmark stock indices Sensex and Nifty plunged by nearly 6 per cent on Tuesday as counting trends showed the ruling BJP may fall short of a clear majority in the Lok Sabha elections.
Reversing its Monday’s sharp gains of over 3 per cent, the 30-share BSE Sensex nosedived 4,389.73 points or 5.74 per cent to close at a more than two-month low of 72,079.05. ‘
In the day trade, the barometer tanked 6,234.35 points or 8.15 per cent to hit a nearly five-month low level of 70,234.43.
The NSE Nifty tumbled 1,982.45 points or 8.52 per cent to 21,281.45 during the day. Later, it ended at 21,884.50, a sharp decline of 1,379.40 points or 5.93 per cent.
Sensex and Nifty had previously declined by around 13 per cent on March 23, 2020 when lockdown was imposed due to the COVID-19 pandemic.
Also Read: Share Market Shock: PSU Stocks Tank Up to 15% Amid Vote Count Of Lok Sabha Poll Results
Nifty’s Massive Fall
Today marks the largest single-day decline for the Nifty since May 2020. The broader market is experiencing an even steeper drop, with both the Nifty Midcap and the Nifty Smallcap indices plummeting over 8% in today’s session.
The India VIX surged by 23% as the market maintained its extreme volatility. This follows a 15% decline in the VIX on Monday, following the release of the exit poll results, CNBC-TV18 reported.
Every sectoral index closed in the red. The Nifty Bank index plummeted by 8%, the Auto index declined by 3.3%.
The Nifty Metal index experienced a sharp 10% downturn, while the PSU Bank index is undergoing its most significant decline since 2021, plunging by 15%.
The Nifty Realty index witnessed a 10% decline, and the Oil & Gas index saw an 11.8% drop by the end of the trading session.
The PSE index, representing state-run companies, which had surged by 85% in 2023 and 45% so far this year, experienced a 15% decline. Nearly all PSU stocks recorded losses ranging between 10% to 20%.
Correction In The Market
Nilesh Shah, MD, Kotak Mahindra AMC told CNBC-TV18, “Undoubtedly the market is on the way up because of the exit poll and now the actual results are way below what exit polls were indicating and that’s why there is a correction in the market. Investors are looking forward to the actual results. Markets had factored in continuity of government and policy push towards accelerated growth. With this kind of result, people will wait on the margin to see what kind of formation happens.”
Wave of Fear
Vinod Nair, head of research, Geojit Financial Services, said, “The unexpected outcome of the general election sparked a wave of fear selling in the domestic market, reversing the recent substantial rally. Despite this, the market maintains its expectation of stability within the coalition, led by BJP as the major election winner, thereby mitigating substantial downside in the medium-term.
“This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy. Alongside, the sectors that have topped in the past five years, including power, capital goods, real estate, and industrials, are advised to exercise caution in the near term. Nevertheless, the long-term growth prospects for these sectors remain robust,” Nair added.
Recovery Of The Market Depends on a Stable Government
Rupak De, senior technical analyst at LKP Securities, said, “Support seems to be very fragile. Immediate support is visible at the psychological level of 22,000, below which the index might fall further towards 21,400-21,500. Recovery looks possible once the trend moves in favour of the BJP winning the election comfortably.”
