Benchmark equity indices Sensex and Nifty tanked nearly 5.74 and 5.93 per cent, respectively on June 4, 2024, marking their most severe losses in four years, as election results shows that the ruling Bharatiya Janata Party is short of a clear majority in the Lok Sabha elections. As of 5.30 pm, the BJP has only 241 seats in its kitty, 31 seats short of the majority.
Earlier in the day, the benchmark indices had tanked almost 8 per cent, reminiscent of the phase market had entered in the Covid-19 pandemic days. By closing bell, as much as Rs 30 lakh crore has been wiped off from the market capitalisation of all listed companies on the BSE.
The Sensex plunged 4,389.73 points to settle at 72,079.05 and Nifty slumped 1,379.40 points to 21,884.50 by the closing bell. Market indices had surged around 3 per cent the previous day on the back of exit poll data. Bank Nifty, one of the top performers yesterday lost 4,051 points or 7.95 per cent to settle at 46,928.60 today.
Adani Group companies saw a major sell-off, with Adani Power losing 17 per cent and Adani enterprises losing 19 per cent. Reliance Industries lost Rs 204 in a day. PSU index remained the biggest loser on the Nifty chart, with many of its constituents, such as REC, Power Finance Corporations PFC, Concor, Bharat Electronics losing between 19 per cent and 21 per cent.
All indices were in the red with Nifty Bank down by 8 per cent, Realty down 9.6 per cent, metal down by 10.6 per cent, while PSU bank dipped 15 per cent and oil and gas were down by 11.8 per cent. Bank of Baroda led the losses in the Bank PSU index with a drop of 19.6 per cent. Small-cap and mid-cap indices also closed 8.2 per cent and 7.9 per cent lower, respectively.
Meanwhile the benchmark 10-year bond yield in India recorded its single-day highest surge since October today, reaching a two-week high at 7.03 percent from its previous close of 6.94 per cent.
Stock market participants are nevertheless optimistic in spite of a coalition government coming to power as they feel demographic dividend, domestic market size and cumulative impact of past reforms will sustain India’s growth story.
Says Siddarth Bhamre, head of research, Asit C Mehta Investment Intermediates: “Markets had factored in the best possible outcome, and the valuations are rich. However, the market is aware of the challenges associated with a coalition government. Now, with election results not being one-sided, we are witnessing profit booking. We believe this profit booking may continue for some more time. Spaces like FMCG and IT may see less damage, as defensive buying along with valuation comfort may keep them immune to this correction. Though we expect some correction to continue in the market, it would not be fair to consider it as the end of the bull market. Most likely this correction may turn out to be a hiccup in the long-term bull run.”
