The Indian equity markets witnessed their worst session since the onset of the COVID-19 pandemic, with benchmark indices plunging drastically as the Lok Sabha election results of 2024 painted a different picture than what exit polls had predicted. The S&P BSE Sensex nosedived by 6,000 points, while the NSE Nifty50 plummeted by 1,600 points.
The carnage on Dalal Street intensified with the Sensex crashing over 6,000 points and the Nifty50 falling nearly 2,000 points, marking the worst session since the COVID-19 pandemic hit the markets.
The bloodbath continued with 29 out of 30 stocks trading in the red on the BSE, while 48 stocks witnessed declines on the Nifty50. The sell-off was triggered by heightened volatility as the 2024 Lok Sabha election results revealed a closer-than-expected contest between the NDA and the INDIA bloc.
Stocks associated with the 'Modi stocks' term, which typically benefit from the policies of the Narendra Modi-led government, faced a significant downturn as early election results outperformed expectations for the opposition INDIA alliance.
At 12:00 pm, REC shares plummeted 22.63% to Rs 467.75, Indian Bank declined 14.01% to Rs 521.70, SJVN tanked 12.96% to Rs 124.60, Power Finance Corporation plunged over 23% to Rs 426.95, HUDCO fell 18.26% to Rs 234.60, and BHEL tanked over 23% to Rs 237.25. Other 'Modi stocks' such as Central Bank, Hindustan Copper, PNB, Canara Bank, NALCO, ONGC, HAL, PSB, NBCC, NTPC, and LIC also witnessed sharp declines.
The gains recorded in the previous session were completely erased on Lok Sabha election results day, with the Sensex falling to an intraday low of 72,337.34, shedding well over 4,000 points, while the Nifty also experienced a significant decline of over 1,000 points.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributed the substantial decline to election results that failed to meet exit poll expectations. He noted that if the BJP fails to secure a majority on its own, it would lead to disappointment and reflect in market sentiment.
Domestic stocks witnessed a significant decline on Tuesday, completely erasing the gains made in the previous session. The benchmarks plummeted as early vote-counting trends indicated that Prime Minister Narendra Modi's BJP-led alliance was likely to secure a majority, but the extent of their victory remained unclear. The BSE Sensex plunged by 4,093 points or 5.35 percent, trading at 72,375, while the broader NSE Nifty index dropped by 1,116 points or 4.80 percent, reaching the 22,148 level.
The decline in domestic bourses was so pronounced that approximately Rs 26.10 lakh crore of BSE market capitalization (m-cap) was wiped out on the day.
As of 11:30 am on Tuesday, during the vote counting for the 543 Lok Sabha seats, the BJP-led National Democratic Alliance (NDA) had crossed the halfway mark of 272, leading in 297 seats. However, this figure fell short of the overwhelming majority forecasted by most exit polls. The INDIA coalition, on the other hand, was leading in 227 seats. This significant deviation from exit poll projections triggered a sharp increase in volatility on Dalal Street.
