Sensex, Nifty register biggest single-day fall in four years

India’s equity market headline indices registered their biggest single-day fall of four years on Tuesday as Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) failed to clinch 272 seats in the 543-seat Parliamentary election, as per the latest poll trends. Even though the NDA alliance is likely to form the government for the third consecutive time, the final seat tally is way lower than market estimates and exit poll results.

The BSE Sensex closed the Tuesday session with a massive loss of 4,390 points, or 5.74%, at 72,079.05, while the Nifty 50 ended with a cut of 1,379 points, or 5.93%, at 21,884.50. At one point, the Sensex was down 6,100 points and the Nifty gave away 1,600 points.

The selling pressure was so intense that it brought memories of the 2004 election result day when the Sensex had crashed over 15% following a surprise NDA loss. When the market closed on Tuesday, investors had lost a whopping Rs 31 lakh crore as the market capitalisation of all BSE listed firms came down to Rs 395 lakh crore from Rs 426 lakh crore.

Vinod Nair, Head of Research, Geojit Financial Services, said, “The unexpected outcome of the general election sparked a wave of fear selling in the domestic market, reversing the recent substantial rally. Despite this, the market maintains its expectation of stability within the coalition, led by BJP as the major election winner, thereby mitigating substantial downside in the medium-term. This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy.”