The stock market faced a significant downturn on Tuesday as the Bharatiya Janata Party (BJP) struggled to secure a decisive lead in the ongoing national election results. By 11 AM, it became clear that the BJP on its own is unlikely to cross the halfway mark, although it is certain that with allies, the National Democratic Alliance (NDA) will form the government at the center. The idea of a coalition government led by the BJP has led to widespread market anxiety and a sharp decline in stock indices.
Since the opening of trading on Tuesday, investor sentiment has been notably bearish. The Bombay Stock Exchange’s benchmark Sensex plummeted by 3905.15 points. Similarly, the Nifty 50 index suffered a substantial drop, falling 1061.05 points by 11 AM. The decline in stocks was widespread, affecting various sectors including banking, automotive, and technology. Major companies like Reliance Industries, HDFC Bank, and Infosys saw significant drops in their share prices, contributing to the overall market downturn. Shares of Bank of Baroda, PNB, SBI, IndusInd Bank, Bandhan Bank, and Axis Bank slipped up to 9 percent, compared to a 5 percent decline in the Bank Nifty index.
Market analysts attribute the steep decline to political uncertainty. The BJP, which has been the dominant force in Indian politics for the past decade, is seen as a pro-industry party whose policies have generally favored economic growth and market stability. The failure to secure a clear majority by the BJP on its own raises concerns about the formation of a stable government and the continuation of economic reforms. Sunil Shah, a market expert, commented, “Yesterday, the market acted on the outcome of exit polls. The early trends are showing that the gap or the lead is not that big, so the market is reacting to that. The market will remain volatile throughout the day.”
In addition to political uncertainty, global market trends and domestic economic indicators have also played a role in the current market volatility. Rising oil prices, inflation concerns, and recent global economic slowdowns have compounded the impact of election jitters on investor sentiment. As the day progresses, the market will remain focused on the final tally and the BJP-led NDA’s final majority figure.