Uncertainty over the General Elections’ outcome led to panic selling in India’s stock markets with key benchmark indices falling about 1.5%.
The S&P BSE Senesx fell 1,062 points, or 1.45% to 72,404. The NSE Nifty-50 index too shed 345 points or 1.55% to 21,957.5.
“There were murmurs [in the market] about lower than expected turnout in the polls, which could make it difficult for the Modi government to return,” said Ambareesh Baliga, an independent stock analyst, adding the confidence in the Prime Minister’s “400 plus (seats)” campaign has waned and has “unsettled investors.”
Only auto stock stable
Except auto stocks, major sectors led by energy, metals, and realty faced selling pressure. Larsen & Toubro, down 6% led the fall among Sensex stocks, followed by Asian Paints and JSW Steel, which fell 4.68% and 3.64% respectively.
Seconding Mr. Baliga, Deven Choksey, MD, KRChoskey Shares & Securities Pvt. Ltd. added, “FIIs (Foreign Institutional Investors) are mainly selling fearing no clear majority (for any party).”
“If the outcome is unexpected, the market could correct sharply post results. But investors are not willing to wait till then and are selling now. When everybody thinks alike, then the fall is sharper,” Mr. Baliga added. He warned of breaching support levels if markets fell further on Friday, leading to sharper sell outs.
“Also there is a fear that the SEBI (Securities and Exchange Board of India) would come out with stricter norms to curb index and derivative trading. So before that comes FIIs are exiting their positions and that is creating pressure on others to sell,” he added.