‘Election’ hurricane in Indian markets
In India, there was a sharp decline in the stock markets with signals that Prime Minister Modi’s party, the BJP, would not gain the majority in the elections. The currency and bonds also fell.
According to the exit polls in India, there was an outflow of 386 billion dollars from the stock markets, signaling that the current Prime Minister, Narendra Modi, cannot come to power alone.
The Nifty 50 Index fell 5.9 percent in Mumbai, recording its worst performance in more than four years. The currency, rupee, recorded its biggest decline in a year. The 10-year bond yield increased by 8 basis points to 7.03 percent. This was the largest increase since October.
Modi’s failure to secure a majority, contrary to expectations, could raise questions about the government’s ability to undertake tough reforms seen as critical for growth.
Prime Minister Modi had stated that they would win 400 seats in the 7-stage general elections that started on April 19 and lasted approximately 6 weeks.
UBS Group Strategist Sunil Tirumalai said, “If Modi’s party, the BJP, does not gain the majority, the bargaining power will be in the hands of the coalition. The next scenarios in the markets may be negative compared to last week.”
The total value of companies on BSE decreased by $386 billion to $4.73 trillion.
The Nifty index fell as much as 8.5 percent during the day, recording the steepest decline since March 2020. The surprise defeat of the BJP in the 2004 elections also caused turmoil in the markets, and a circuit breaker was implemented due to the sharp decline in the stock market.