Sensex Plunges Amidst Early Lok Sabha Election Results Trends

Indian equity markets witnessed a turbulent start on Tuesday as investors closely monitored the initial trends emerging from the 2024 Lok Sabha election results. The S&P BSE Sensex, which initially faced a sharp decline of over 2,000 points, managed to stabilize around the 74,800 mark, marking a considerable drop of approximately 1,700 points.

Simultaneously, the Nifty50 also faced downward pressure, testing the 22,800 level with a decline exceeding 400 points. The broader markets experienced a similar trend, with the BSE MidCap and SmallCap indices both plummeting over 2 per cent each.

Specific sectors, such as the Nifty PSU Bank and the Nifty Metal index, witnessed notable declines of 5.5 per cent and 3 per cent respectively. The early results from the Election Commission of India indicated that the Narendra Modi-led BJP was leading in 202 seats, while the Congress party was trailing with 78 seats.

The market’s steep fall was primarily attributed to the initial results falling short of the exit polls’ expectations, which had been factored in by investors the previous day. Concerns regarding the BJP’s ability to secure a majority on its own led to investor disappointment, reflecting in the market sentiment.

Additionally, there were apprehensions that the upcoming Modi 3.0 government might not prioritize reforms as much as anticipated, potentially shifting towards a more welfare-oriented approach. This shift was evident in the market’s response, notably seen in the strength exhibited by FMCG stocks.