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Stock market crash: Sensex, Nifty witness biggest 1-day fall in 4 yrs; investors lose nearly Rs 17 lakh crore

Lok Sabha Elections 2024 result: The Sensex finally closed with a massive loss of 4,390 points, or 5.74 per cent, at 72,079.05, while the Nifty 50 ended with a cut of 1,379 points, or 5.93 per cent, at 21,884.50.

Lok Sabha Election 2024 results stock market crash: Nifty sees worst fall since March 2020, investors lose Rs 17 lakh crore snt
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First Published Jun 4, 2024, 4:19 PM IST

The Indian stock market on Tuesday saw a significant selloff across the board as tendencies in the Lok Sabha Elections 2024 vote-counting process suggested that the final results differed greatly from the predictions made by the exit polls.

Benchmark stock indices, Sensex and Nifty, fell over 6 percent, marking the largest one-day decline in four years, as counting trends suggested the ruling BJP could not secure a clear majority in the Lok Sabha Elections 2024.

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.

Investors appear to have been alarmed by this, as they had anticipated political stability and policy consistency following the elections. Even if the NDA might still form the government, analysts note that it might be difficult for the next administration to firmly adopt bold policy changes.

The total market capitalization (mcap) of the BSE-listed companies fell to around Rs 395 lakh crore from approximately Rs 412 lakh crore in the previous session, resulting in investors losing roughly Rs 17 lakh crore in a single day. 

The markets were plunged into negative territory by massive profit booking in PSUs, public banks, power, utilities, energy, oil and gas, and capital goods shares.

"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," Vinod Nair, Head of Research, Geojit Financial Services told PTI.

Also read: Bloodbath on Dalal Street explained: Why markets suffered bear attack on Lok Sabha Election 2024 results day?

When the Narendra Modi government assumed power on May 16, 2014, the Sensex surged by 261.14 points or 0.90 percent to close at 24,121.74, while the Nifty rose by 79.85 points or 1.12 percent to reach 7,203. In intra-day trading, the BSE benchmark crossed the 25,000-mark.

Conversely, on May 23, 2019, the Sensex declined by 298.82 points or 0.76 percent, settling at 38,811.39, and the Nifty ended 80.85 points or 0.69 percent lower at 11,657.05. Despite this, both benchmarks achieved milestones during the day, with the Sensex touching the 40,000-mark for the first time, and the Nifty surpassing 12,000.

Among the 30 Sensex companies, notable decliners included NTPC, plummeting over 15 percent, followed by State Bank of India, Larsen & Toubro, and Power Grid, each declining by over 12 percent. Other major laggards comprised Tata Steel, IndusInd Bank, Bharti Airtel, ICICI Bank, Axis Bank, Reliance Industries, and JSW Steel.

Conversely, Hindustan Unilever surged by 6 percent, while Nestle climbed 3 percent. Tata Consultancy Services, Asian Paints, and Sun Pharma also posted gains. However, except for FMCG, all sectoral indices ended in the red.

The trends emerging from the vote counting in the Lok Sabha elections on Tuesday indicated disappointing results for the BJP-led NDA, especially in its strongholds like Uttar Pradesh, Haryana, and Rajasthan, despite expectations of forming the government with approximately 290 seats.

Foreign Institutional Investors (FIIs) infused Rs 6,850.76 crore into equities on Monday, as per exchange data. In Asian markets, Seoul and Tokyo closed lower, while Shanghai and Hong Kong recorded gains. European markets were trading lower, and US markets ended with a mixed sentiment on Monday.

The global oil benchmark, Brent crude, witnessed a decline of 1.88 percent to USD 76.89 per barrel. The markets witnessed a significant surge on Monday following exit polls predicting a massive victory for the BJP-led NDA in the Lok Sabha elections.

The BSE benchmark surged by 2,507.47 points or 3.39 percent, reaching a new closing peak of 76,468.78, marking its most substantial single-day gain in three years. Intra-day, it soared by 2,777.58 points or 3.75 percent, hitting a record high of 76,738.89. The NSE Nifty also climbed by 733.20 points or 3.25 percent, closing at 23,263.90, and reached an intra-day high of 23,338.70, marking a fresh all-time high.

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