Lok Sabha Elections 2024: The 30-share BSE Sensex dropped 3,311.87 points or 4.33 per cent to 73,156.91. The NSE Nifty tumbled 1,102.55 points or 4.73 per cent to 22,161.35.
The Indian stock market on Tuesday faced a significant downturn, wiping out approximately Rs 21 lakh crore from investors' wealth as the initial trend showed BJP winning lesser number of seats in the Lok Sabha Elections 2024 than predicted in exit polls. Benchmark equity indices Sensex and Nifty tanked over 5 per cent in late morning trade.
The 30-share BSE Sensex dropped 3,311.87 points or 4.33 per cent to 73,156.91. The NSE Nifty tumbled 1,102.55 points or 4.73 per cent to 22,161.35.
Soon after the BSE benchmark dived 4,131.44 points or 5.40 per cent to 72,337.34, and the Nifty slumped 1,263.3 points or 5.43 per cent to 22,000.60.
It's worth noting that Tuesday's slump witnessed Nifty register its biggest fall in 10 years in absolute terms.
State Bank of India saw a significant drop of over 10% among the 30 Sensex companies, with Power Grid and NTPC also experiencing nearly a 10% decline. Other major losers included Larsen & Toubro, Axis Bank, Tata Steel, and Reliance Industries.
In the Lok Sabha Elections, the BJP-led NDA surged ahead with leads in 280 seats, crossing the majority mark based on trends from 528 seats. The Congress also made strides, surpassing the 100-mark in leads according to Election Commission data.
At 10:30 am, the BJP was leading in 234 seats and secured the Surat seat in Gujarat uncontested. Meanwhile, the Congress-led INDIA bloc was leading in 200 seats, outperforming earlier exit poll predictions.
At 9:35 am, the Bombay Stock Exchange (BSE) saw its total market capitalization drop to nearly Rs 406 lakh crore, down from Rs 426 lakh crore at the previous close. The benchmark indices were already showing signs of trouble during the pre-open session. The Sensex fell by 183 points, or 0.24%, to 76,285.78, and the Nifty was down by 84.40 points, or 0.36%, to 23,179.50.
As the markets opened, the situation deteriorated rapidly. The Sensex plunged 1,708.54 points, or 2.23%, to 74,760.24, while the Nifty dropped by 488.55 points, or 2.1%, to 22,775.35. By 10 am, the Sensex was trading 1,654 points lower, or 2.16%, at 74,814, and the Nifty had shed 509 points, or 1.19%, to 22,754.
The selloff was widespread, impacting almost all sectors and causing a significant downturn in most stocks. On the BSE Sensex, only three stocks—Sun Pharma, Nestle India, and Hindustan Unilever—remained in positive territory. In contrast, major companies like NTPC, State Bank of India (SBI), Power Grid Corporation, Larsen & Toubro, and HDFC Bank were among the top losers.
The Nifty 50 showed an even grimmer picture, with only Sun Pharma trading positively. Adani Enterprise, Adani Ports & SEZ, Coal India, NTPC, and SBI were the top decliners on the index.
The broader market indices reflected the widespread panic, with the BSE SmallCap index dropping by 3.81% and the BSE MidCap index shedding 3.71%. All sectoral indices were deep in the red as investors rushed to book profits after Monday's record rally.
The PSU Bank and Oil & Gas indices, which had been top performers on Monday, were among the biggest losers on Tuesday. PSU, Oil & Gas, and Energy stocks took a significant hit, with the Nifty PSE index giving up all of Monday's gains. Adani Group stocks were particularly hard hit, with some falling as much as 17% due to the mixed election outcome indications.
Monday's market session had witnessed a robust rally, with both the Sensex and Nifty recording their best performance in nearly 40 months. This surge was driven by exit polls projecting a potential two-thirds majority for the BJP-led NDA in the Lok Sabha elections. Investor sentiment was buoyed by the prospect of political stability and continued economic reforms under Prime Minister Modi's leadership.
However, the early vote-counting trends on Tuesday indicated a less decisive victory for the NDA, leading to market uncertainty. The India VIX, a measure of market volatility, spiked more than 20% as the INDIA Bloc crossed the 200 mark in early poll trends, indicating a stronger-than-expected performance by the opposition.
The sharp selloff reflects the market's sensitivity to political developments and the high stakes associated with the Lok Sabha elections. Investors had hoped for a clear and decisive victory for the NDA to ensure continuity in policy and economic reforms. Initial vote-counting trends suggesting a mixed outcome created uncertainty, leading to a massive selloff. Market analysts suggest that volatility may persist until the final election results are confirmed. A clear majority for the NDA could potentially stabilize the markets, while a hung parliament or a strong performance by the opposition could lead to further uncertainty and volatility.
Tuesday's market turmoil underscores the link between political developments and market performance in India. As vote counting for the 2024 Lok Sabha elections progresses, investors will keenly watch for definitive trends that could either reassure them or prompt further selloffs. The rapid loss in market capitalization within minutes of trading opening highlights the high stakes and the potential for swift market reactions to political uncertainty. For now, investors are bracing for a volatile session, awaiting the final outcome of the elections.