Stock Market Bloodbath: Sensex Falls 4,300 Points, Nifty Down 6% As BJP Misses Majority Mark

Indian equity benchmark indices commenced the session on a tepid note and witnessed a bloodbath on Tuesday as trends showed Prime Minister Narendra Modi-led BJP winning a lesser number of seats than anticipated in exit polls. Panic selling was seen across the board in the early trading.

The BSE Sensex tanked 4,389.73 points or 5.74 per cent to settle at 72,079.05. The NSE Nifty50 plunged 1,379.40 points or 5.93 per cent to close at 21,884.50. All the sectors, except FMCG, experienced significant losses, with PSUs, energy, and metals being the biggest losers. The broader indices also tanked, each losing around 8 per cent.

During the midday session, marginal recovery was recorded but did not last as another round of selling in the last session pulled the indices lower to finish the session 6 per cent down.

At the time of writing this report, the ruling Bharatiya Janata Party (BJP) had won 17 seats and was leading in 227 others, according to the data provided by the Election Commission of India (ECI). The ruling National Democratic Alliance (NDA) was leading on 294 seats. The INDIA Alliance was leading on 231 seats and the Indian National Congress (INC) on 99 seats.

The Nifty PSU Index saw a sharp decline of 15.14 per cent and resulted in investors losing a sum of around Rs 1 lakh crore, dealing a major setback to their investment portfolios. Share of State Bank of India (SBI), India’s largest public sector bank, fell over 13 per cent to Rs 784.60.

According to experts, with the NDA expected to form a government though with the important support of coalition partners, markets look jittery about the prospects of strong decision-making. Investors are suggested to be prepared for volatility due to currently high valuations and adopting a diversified approach.

Vinod Nair, Head of Research at Geojit Financial Services said that 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," he added.

According to Nair, 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.

Adani Ports, Adani Enterprises, ONGC, NTPC, and SBI were among the biggest losers on the Nifty, while top gainers included Hindustan Unilever, Nestle, Britannia Industries, Hero MotoCorp and Tata Consumer Products.

Ajit Mishra – SVP of Research at Religare Broking said, “Following this sharp decline, we expect continued choppiness, so participants should limit their trades and wait for stability. Investors, however, can use this opportunity to accumulate quality stocks available at good bargains.”

Indian rupee settled 38 paise lower at 83.52 per dollar on Tuesday versus Monday’s close of 83.14.