Poll outcome scare: Sensex, Nifty register biggest single-day fall in four years

When the market closed on Tuesday, investors had lost a whopping Rs 31 lakh crore
Poll outcome scare: Sensex, Nifty register biggest single-day fall in four years

India’s equity market headline indices registered their biggest single-day fall of four years on Tuesday as Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) failed to clinch 272 seats in the 543-seat Parliamentary election, as per the latest poll trends. Even though the NDA alliance is likely to form the government for the third consecutive time, the final seat tally is way lower than market estimates and exit poll results.

The BSE Sensex closed the Tuesday session with a massive loss of 4,390 points, or 5.74%, at 72,079.05, while the Nifty 50 ended with a cut of 1,379 points, or 5.93%, at 21,884.50. At one point, the Sensex was down 6,100 points and the Nifty gave away 1,600 points.

The selling pressure was so intense that it brought memories of the 2004 election result day when the Sensex had crashed over 15% following a surprise NDA loss. When the market closed on Tuesday, investors had lost a whopping Rs 31 lakh crore as the market capitalisation of all BSE listed firms came down to Rs 395 lakh crore from Rs 426 lakh crore.

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.”

Poll outcome scare: Sensex, Nifty register biggest single-day fall in four years
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Nair added, “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."

Aditya Gaggar, Director of Progressive Shares, said mayhem was seen in the form of panic selling across the board in the morning trade itself. “Barring FMCG, all the sectors ended the session with a sharp decline with PSU Banks and Energy being the major underperformers. The real pain was seen in the Broader markets as Mid and Smallcaps corrected over 7.8% to underperform the Frontline Index. On the daily chart, the Index has formed a massive red candle which suggests extreme pessimism in the markets and the impact of counting is likely to persist tomorrow as well. The immediate support is located at 21,600 while a level of 22,500 will be a strong hurdle,” added Gaggar.

Amit Goel, Co-Founder & Chief Global Strategist, Pace 360, said that Indian equities have come down today as the ruling party has suffered a setback in the polls.

“While the BJP should be able to form the government again, but the reform agenda of the government may go into the backburner. We believe investors should stick to the fundamentals and buy only the stocks with reasonable valuations. We believe Indian equities will go into a bear market and will fall by more than 20% by April 2025. Hence, investors should buy only when the market is deeply oversold and that too for the short term to medium term only,” said Goel.

Poll outcome scare: Sensex, Nifty register biggest single-day fall in four years
PSU stock takes a beating; large CPSEs and PSU banks fall by over 20%

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