Election Results Impact: Sensex and Nifty Plummet as BJP Falls Short of Predictions

Introduction

The Indian stock market witnessed a dramatic downturn on Tuesday following the release of election results. As the initial trend indicated that the Bharatiya Janata Party (BJP) was winning fewer seats than predicted in exit polls, investors grew jittery. Here’s a breakdown of the market’s reaction:

Market Meltdown

• The BSE Sensex, comprising 30 major companies, plummeted by 6,234.35 points or 8.15%, reaching 70,234.43 during afternoon trading.
• The NSE Nifty, another key index, experienced a sharp decline of 1,982.45 points or 8.52%, closing at 21,281.45.

Sector-Specific Impact

• State Bank of India (SBI): SBI shares took a severe hit, dropping over 16%.
• Power Grid Corporation of India: Power Grid witnessed a significant decline, plunging nearly 15%.
• NTPC: The National Thermal Power Corporation (NTPC) also suffered, with its shares falling by approximately 15%.

Election Uncertainty

• Investors’ anxiety stems from the uncertainty surrounding the election results. The marathon six-week election concluded over the weekend, and the Election Commission of India began counting votes at 8 am local time.
• While exit polls initially predicted a landslide victory for the BJP and its allies, opposition leaders remain skeptical, asserting that their alliance, led by the Indian National Congress, would secure 295 seats.

Global Impact

• Australian and New Zealand Bonds: These rallied, mirroring gains in US Treasuries. Weak US data bolstered expectations of a Federal Reserve interest rate cut.
• Asian Shares: Asian markets declined, reflecting the market’s cautious sentiment.

Conclusion

The Indian stock market’s sharp decline underscores the impact of election outcomes on investor confidence.