Indian shares see worst session in 4 years on narrower lead for Modi’s alliance

BENGALURU - Indian shares plunged over 8 per cent on June 4, set for their worst day in four years and erasing their gains for 2024, as vote-counting trends showed Prime Minister Narendra Modi’s alliance

falling short of a predicted landslide victory.

The NSE Nifty 50 index was down 7.2 per cent at 21,605 points as of 12.41pm IST and the S&P BSE Sensex fell 6.6 per cent to 71,366.

The indexes fell as much as 8.5 per cent, poised for their worst session since the onset of the Covid-19 pandemic. They had jumped over 3 per cent on June 3 after exit polls projected that the BJP-led alliance will likely get a two-thirds majority in the lower house.

With the day’s losses, the benchmarks are down nearly 1 per cent so far this year.

TV channels showed the ruling National Democratic Alliance was ahead in nearly 300 seats. The minimum needed for a simple majority in the 543-member Lower House of Parliament is 272 seats.

The volatility index jumped to its highest since Feb 2022 at 31.71, after easing on June 3.

“Since exit polls were at an extreme, anything that doesn’t point to more strength is obviously a negative,” said Mr Anand James, chief market strategist at Geojit Financial.

“Despite exit polls giving a resounding victory for the ruling party, markets volatility gauge did not go down below 20, as it was pricing in an outlier,” he said.

The longs added recently by the foreign investors after the exit polls may have come under pressure, he added.

All sectors were in the red. Banks fell 7.9 per cent, realty dropped 9.3 per cent, infrastructure declined 13 per cent, while oil and gas stocks lost 11.7 per cent and state-run companies and public-sector banks retreated 19 per cent and 18 per cent, respectively.

The small-cap and mid-cap were trading down 12.4 per cent and 11.3 per cent.

Adani Enterprises and Adani Ports lead losses with a 25 per cent fall each in Nifty 50 index. Other Adani group stocks were down between 9 per cent and 20 per cent.

The group stocks had jumped between 4 per cent and 18 per cent on Monday after the exit polls.

“The fear of the market is whether present numbers will stay or will reduce further. (Even at current majority) there will be some element of disappointment as they are below market expectations,” said Mr Mayuresh Joshi, head, equity research India at William O’Neil and Company.

“Markets were at an all-time high, a lot of hope was built up (on BJP’s majority) and these will unwind over the next few sessions and the focus will turn to policy announcements as the reforms will any way continue with BJP getting an absolute mandate,” he said. REUTERS