Mumbai, Jun 04 (The Street Press India) – In the largest single-day drop in four years, benchmark stock indices Sensex and Nifty plummeted nearly 6% on Tuesday as vote counting trends indicated the BJP might not secure a clear majority in the Lok Sabha elections.
Erasing Monday’s sharp gains of over 3%, the 30-share BSE Sensex plunged 4,389.73 points, or 5.74%, closing at a two-month low of 72,079.05. During the day’s trading, the index fell by 6,234.35 points, or 8.15%, reaching a nearly five-month low of 70,234.43.
The NSE Nifty tumbled 1,982.45 points, or 8.52%, to 21,281.45 during the day. It later ended at 21,884.50, marking a sharp decline of 1,379.40 points, or 5.93%. Sensex and Nifty last saw a comparable drop of around 13% on March 23, 2020, when the lockdown was imposed due to the COVID-19 pandemic.
Heavy profit booking in PSUs, public banks, power, utilities, energy, oil and gas, and capital goods shares dragged the markets deeply into the red.
The unexpected general election outcome triggered a wave of fear selling in the domestic market, reversing the recent substantial rally. However, the market still expects stability within the coalition led by BJP, the major election winner, which could mitigate significant downside in the medium term.
“This is likely to lead to a major shift in political policy with a focus on social economics, positively impacting the rural economy,” said Vinod Nair, Head of Research at Geojit Financial Services.
Vote counting trends indicated that while BJP was set to be the single largest party, it could fall short of an absolute majority, making it reliant on its NDA partners to form a government.
When the Narendra Modi government came to power on May 16, 2014, the Sensex rallied 261.14 points, or 0.90%, to close at 24,121.74, while the Nifty jumped 79.85 points, or 1.12%, to 7,203. The BSE benchmark even hit the 25,000 mark in intraday trade on that day.
On May 23, 2019, the Sensex declined 298.82 points, or 0.76%, to settle at 38,811.39, while the Nifty ended 80.85 points, or 0.69%, lower at 11,657.05. Despite the declines, the BSE benchmark hit the 40,000 mark for the first time ever, and the Nifty breached the 12,000 level on that day.
Among the 30 Sensex companies, NTPC plunged over 15%, while State Bank of India dropped more than 14%. Larsen & Toubro tumbled over 12%, and Power Grid dived more than 12%. Other major laggards included Tata Steel, IndusInd Bank, Bharti Airtel, ICICI Bank, Axis Bank, Reliance Industries, and JSW Steel.
Conversely, Hindustan Unilever jumped 6%, and Nestle climbed 3%. Tata Consultancy Services, Asian Paints, and Sun Pharma also emerged as gainers.
All sectoral indices, except for FMCG, closed in the red.
Adani group shares also faced significant declines. Adani Ports & SEZ plummeted over 21%, Adani Enterprises nearly 20%, Adani Power 17%, Adani Energy Solutions 20%, and Adani Green Energy over 19%.
“Markets have reacted sharply to the initial trends showing the NDA leading with around 290 seats, which is significantly lower than the exit polls’ projection of 350-370 seats. Although the NDA is still poised to form a government with the support of coalition partners, the markets are jittery about the prospects of strong decision-making.
“Markets believe that the reformistic approach, a hallmark of the previous two terms, might take a backseat in the third term. However, we believe it’s still early to jump to conclusions and we should wait for a clearer picture,” said Manish Chowdhury, Head of Research at StoxBox.
In the broader market, the BSE midcap gauge tanked 8.07%, while the smallcap index plunged 6.79%.
Among the indices, utilities dived 14.40%, power tumbled 14.25%, oil and gas dropped 13.07%, services fell 12.65%, capital goods declined 12.06%, energy was down 11.62%, and metal decreased 9.65%.
On the BSE, 3,349 stocks declined, 488 advanced, and 97 remained unchanged. Additionally, 292 stocks hit their 52-week low, while 139 reached their one-year peak.
On the NSE, 2,438 stocks declined, 242 advanced, and 70 were unchanged. The number of stocks hitting a 52-week high stood at 83, while 271 stocks fell to their 52-week low.
In Asian markets, Seoul and Tokyo settled lower, while Shanghai and Hong Kong ended with gains.
European markets were trading lower, while US markets ended on a mixed note on Monday.
Global oil benchmark Brent crude declined 1.88% to USD 76.89 a barrel.
Meanwhile, the rupee fell by 37 paise to 83.51 against the US dollar due to foreign fund outflows.
Markets had jumped sharply on Monday after exit polls predicted a massive win for the BJP-led NDA in the Lok Sabha elections. The BSE benchmark soared by 2,507.47 points, or 3.39%, to settle at a new closing peak of 76,468.78, marking its biggest single-day gain in three years. The NSE Nifty climbed 733.20 points, or 3.25%, to finish at 23,263.90.
