The Indian equity witnessed a significant market crash on Tuesday as soon as trading commenced at 9:15 am, despite early trends indicating a lead for the BJP-led NDA alliance. However, these early trends also suggested that the opposition INDIA bloc’s seat tally might surpass what exit polls had anticipated.
Both the frontline indices, BSE Sensex and NSE Nifty50, opened 2% lower on Tuesday, following their surge of more than 3% each on Monday. The selling pressure intensified quickly, leading to a sharp decline of 3.5% for both indices. The Sensex hit a low of 73,659, while the Nifty reached a low of 21,179 on Tuesday.
The market heavyweight Reliance Industries experienced a significant drop of over 4%, while stocks of the Adani Group plummeted by up to 10%.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized that the market had already factored in a clear win for the NDA and a majority for the BJP, evident from the 733-point rally in the Nifty the previous day. He advised investors to refrain from rushing into buying decisions, even if the results confirm the exit polls, suggesting instead to remain invested in large caps and consider profit booking in small caps.
Aditya Gaggar, Director of Progressive Shares, highlighted that the Nifty50 had formed a hanging man candlestick pattern on the daily chart, indicating a potential trend reversal. However, he emphasized that the outcome of the general elections would likely influence the market trend, leading to considerable volatility on both sides.
Gaggar also noted that while all sectors had shown strong outperformance in the previous session, with some reaching record levels, it was prudent to wait for a clearer picture amidst the probable volatility.
This abrupt market crash underscores the cautious sentiment among investors, who are closely monitoring the evolving political landscape for potential implications on the economy and market stability