Indian stocks tanked the most in more than four years on Tuesday, as vote counting suggested Prime Minister Narendra Modi's Bharatiya Janata Party (BJP)-led alliance is unlikely to win the overwhelming majority predicted by exit polls.
Modi's National Democratic Alliance (NDA) looked set to secure a majority in early vote counting in the general election, but the opposition alliance (INDIA) led by Rahul Gandhi's centrist Congress party was also doing better than expected.
The BJP was short of a majority of its own, according to TV channels, with the overall NDA alliance numbers well short of the landslide forecast in exit polls.
The Nifty index dropped as much as 8.5 per cent to 21,281.45 points, while the BSE index fell to a low of 70,234.43 points, down 8.15 per cent on the day. That was the biggest fall since March 2020 and pulled stocks sharply away from record highs struck a day earlier.
By 7.50am GMT, both markets had recovered slightly to trade down 5.5 per cent on the day.
“The biggest disappointment for the market is the fact that [the] BJP does not have a majority,” said Dipan Mehta, founder director at Elixir Equities.
“I don't need to say more, but that opens up a Pandora's box because all the other players, whether they are NDA or INDIA, they are all quite volatile. So the biggest concern in the market is the fact that BJP did not get the majority on its own.”
Exit polls over the weekend had projected a big win for Modi's NDA, catapulting markets to all-time highs on Monday as investors were buoyed by expectations of sustained economic growth.
Benchmark indexes had more than tripled in value since Modi became prime minister in May 2014, as of Monday's close.
However, on Tuesday, shares of government-owned banks, infrastructure and capital goods firms that gained sharply on Monday saw the largest falls.
“We will see the pull back as a buying opportunity,” said Gary Tan, portfolio manager at Allspring Global Investments.
“Regardless of the final election count, the India economy will continue to benefit from longer-term tailwinds of favourable population demographics and the ongoing geopolitical tensions between China and US.”
The lack of clarity on the margin of victory for the NDA saw intraday volatility on the share index rise to its highest level in 26 months.
“The current volatility is due to fresh short positions being built-up,” Aniket Nerkar, founder, AlphaStrat, a firm specialising in trading and investment strategies of derivatives.
A drop in volumes in recent weeks and selling by high-frequency traders is also accelerating the drop, he said.
The rupee dropped as low as 83.5175 against the dollar, its weakest since May 15 versus its previous close of 83.1425. The benchmark 10-year bond yield rose as much 12 basis points to 7.06 per cent.
“The only thing that a lower number than 300 [seats] for NDA will do is compel a rethink for the main party on policy approach so far, and could mean policies to address K-shaped recovery and hence positive for consumption sector,” said Garima Kapoor, economist at Elara Capital.
Foreigners, who poured a net $20.7 billion into Indian equities last year but had pulled back ahead of the election, are widely expected to turn buyers if the Modi alliance secures a decisive mandate.
They bought shares worth a net 68.51 billion rupees ($824.4 million) on Monday, while domestic institutional investors purchased 19.14 billion rupees in stocks, based on provisional exchange data.
Investors expect the Modi government to continue focusing on turning the country into a manufacturing hub – a project that has courted foreign companies including Apple and Tesla to set up production as they diversify beyond China.
“India is all about infrastructure,” said Steve Lawrence, chief investment officer at Balfour Capital, who manages €350 million ($381.61 million) across different funds.
“It's all about infrastructure investments; roads and electricity. With the type of technology that they have, you could see a tremendous amount of growth.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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Benefits of first-time home buyers' scheme
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COMPANY PROFILE
Name: Akeed
Based: Muscat
Launch year: 2018
Number of employees: 40
Sector: Online food delivery
Funding: Raised $3.2m since inception
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- It can be as long as you link
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From Conquest to Deportation
Jeronim Perovic, Hurst
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Ain Dubai in numbers
126: The length in metres of the legs supporting the structure
1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch
16 A380 Airbuses: The equivalent weight of the wheel rim.
9,000 tonnes: The amount of steel used to construct the project.
5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place
192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.
The bio
His favourite book - 1984 by George Orwell
His favourite quote - 'If you think education is expensive, try ignorance' by Derek Bok, Former President of Harvard
Favourite place to travel to - Peloponnese, Southern Greece
Favourite movie - The Last Emperor
Favourite personality from history - Alexander the Great
Role Model - My father, Yiannis Davos
Honeymoonish
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UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
What is a black hole?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
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More on Quran memorisation:
The Facility’s Versatility
Between the start of the 2020 IPL on September 20, and the end of the Pakistan Super League this coming Thursday, the Zayed Cricket Stadium has had an unprecedented amount of traffic.
Never before has a ground in this country – or perhaps anywhere in the world – had such a volume of major-match cricket.
And yet scoring has remained high, and Abu Dhabi has seen some classic encounters in every format of the game.
October 18, IPL, Kolkata Knight Riders tied with Sunrisers Hyderabad
The two playoff-chasing sides put on 163 apiece, before Kolkata went on to win the Super Over
January 8, ODI, UAE beat Ireland by six wickets
A century by CP Rizwan underpinned one of UAE’s greatest ever wins, as they chased 270 to win with an over to spare
February 6, T10, Northern Warriors beat Delhi Bulls by eight wickets
The final of the T10 was chiefly memorable for a ferocious over of fast bowling from Fidel Edwards to Nicholas Pooran
March 14, Test, Afghanistan beat Zimbabwe by six wickets
Eleven wickets for Rashid Khan, 1,305 runs scored in five days, and a last session finish
June 17, PSL, Islamabad United beat Peshawar Zalmi by 15 runs
Usman Khawaja scored a hundred as Islamabad posted the highest score ever by a Pakistan team in T20 cricket
UAE currency: the story behind the money in your pockets
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Challenge Cup result:
1. UAE 3 faults
2. Ireland 9 faults
3. Brazil 11 faults
4. Spain 15 faults
5. Great Britain 17 faults
6. New Zealand 20 faults
7. Italy 26 faults
