Amidst political uncertainty fueled by election results, the stock market witnessed a drastic plunge, with both the Sensex and Nifty plummeting by more than 8%. Financial services and oil and gas sectors faced significant selling pressure, resulting in panic selling by investors.
Contrary to earlier exit poll predictions, indicating a clear majority for the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA), the actual vote counts suggest a potential scenario where the BJP might have to rely on alliance partners for a third term in power. This unexpected turn of events shook investor confidence, triggering a sharp downturn in the market.
As of midday trading, the Sensex was down by a staggering 7.4%, while the Nifty 50 witnessed a decline of 7.8%. The sell-off was particularly harsh on PSU stocks, with some facing temporary suspension due to a steep fall of 15%. Companies like BEL, PFC, and REC bore the brunt of the market turmoil, experiencing declines between 15-20%.
Market experts attribute the steep fall to the disparity between the election results and earlier market expectations. The prospect of the BJP failing to secure a majority on its own has led to disappointment among investors, reflecting in the market downturn.
The market plunge also triggered margin calls, further intensifying the selling pressure. With uncertainty looming over the formation of the new government, investors are closely monitoring the situation for any indications of political stability.
Technical analysts suggest that the Nifty 50 needs to close below certain levels for bears to dominate the market, indicating ongoing volatility and uncertainty.
Despite the overall negative sentiment, certain stocks managed to buck the trend, with companies like HUL, Hero MotoCorp, and Britannia emerging as key gainers. However, others such as Adani Ports, Coal India, and NTPC faced significant losses.
In addition to the broader market trends, specific stock movements were observed, such as the slump in shares of Adani Ports and Special Economic Zone (ASPEZ) due to profit booking, and the decline in defense-related companies’ stocks as investors opted to secure partial profits following recent gains.
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