Breaking: Indian stock tanks 5,600 points in biggest crash since Covid as hopes of Modi’s supermajority fade

The Indian benchmark index, Sensex, was down 5,600 points on Tuesday at 1pm IST (Indian Standard Time) as the early voting trends dashed hopes of a super majority for the current Prime Minister Narendra Modi’s Bhartiya Janata Party.

This is in sharp contrast to what the pundits and exit polls were predicting since the beginning of the mammoth general elections in India with 900 million voters.

Speaking to Invezz, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said:

The steep fall is due to the results so far falling short of the exit polls which the market had discounted yesterday. If BJP doesn’t get a majority on its own there will be disappointment and this is getting reflected in the market. Also it is possible that Modi 3.O may not be as reform-oriented as the market expected and may turn more welfare- oriented. This is getting reflected in the strength in FMCG stocks.

Worst fall since Covid struck India

Tuesday’s crash means this is the worst fall the indices have seen since since March 2020.

The crash also erased all of Monday’s gains after exit polls projected that the BJP-led alliance will likely get a two-thirds majority in the lower house.

All sectors were in the red.

Bank stocks fell 7.8%, realty dropped 9.1%, infrastructure declined 10.5%, while oil and gas stocks lost 11.7% and state-run companies and banks retreated 17% and 16%, respectively.

What do early trends show?

As per the initial trends, the NDA is currently leading on 298 seats, while the INDIA bloc is ahead on 225 seats.

A party or alliance needs to cross the 272 mark in the 543-seat Lok Sabha assembly to form the government.

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