![People stand in queues to cast their votes at a polling station during the last round of a six-week-long national election in Varanasi, India, Saturday, June 1, 2024. (AP Photo/Rajesh Kumar Singh) ASSOCIATED PRESS](https://turan.az/resized/news/2024/QmQeyZOEkunjCS0ZYEtI5yDJWm2XJmOe1zS1kKXp-750-500-resize.webp)
People stand in queues to cast their votes at a polling station during the last round of a six-week-long national election in Varanasi, India, Saturday, June 1, 2024. (AP Photo/Rajesh Kumar Singh) ASSOCIATED PRESS
India Stocks Lose $35 Billion as Elections Tighter Than Expected
Bloomberg: India’s stocks market plummeted, erasing nearly $35 billion in market value, as tallies signaled that Prime Minister Narendra Modi’s ruling party was struggling to win a majority of seats in national elections, a stunning result after exit polls showed he was on pace for a landslide victory.
The NSE Nifty 50 Index tumbled 5.9% in Mumbai, its worst day in more than four years, as counts showed Modi’s Bharatiya Janata Party and its allies in the National Democratic Alliance were leading in more than 290 seats, slightly more than 272 needed for a majority in parliament and well short of the roughly 350 they won in 2019. The rupee fell the most in a year and the 10-year yield rose.
A narrower-than-expected victory for Modi’s alliance will raise questions about the new government’s ability to push through politically difficult reforms in land and labor laws — seen as crucial by some investors to sustain India’s economic growth, already the world’s fastest. Before voting kicked off on April 19, Modi had boldly predicted that his alliance would win a whopping 400 seats.
“As BJP does not have a simple majority, the bargaining power shifts materially within the alliance,” Sunil Tirumalai, strategist at UBS Group AG, wrote in a note. “Most scenarios from here could be taken negatively by the market compared to expectations last week.”
More than 20 opposition parties, spearheaded by Rahul Gandhi, formed a united front called the Indian National Developmental Inclusive Alliance in a bid to defeat Modi. A mixture of regional and caste-based groups, the alliance focused on appealing to voters who felt left out of India’s growth story, which has been marked by growing inequality, pervasive joblessness, rising living costs and growing demand for welfare support. It was on course to win more than 180 seats.
Businesses linked to the government’s development goals tumbled, with Adani Ports & Special Economic Zone Ltd. taking a nosedive. The rupee weakened by the most in 10 months against the dollar, and the yield on the 10-year bond rose as high as 11 basis points to 7.06%, the biggest jump since October.
The Nifty tumbled as much as 8.5% at one point, coming close to hitting its first circuit limit since Covid-era crash in March 2020. The selloff had echoes from the 2004 elections when the BJP’s unexpected defeat triggered a market crash. Trading was suspended twice when the S&P BSE Sensex fell more than the 10% limit, the first time in the exchange’s history.
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