Indian shares dropped 3% on Tuesday as the early vote counts indicated Prime Minister Narendra Modi’s BJP-led alliance was underperforming against expectations. The NSE Nifty 50 and S&P BSE Sensex fell nearly 3%, reflecting investor concerns over the clarity of the electoral outcome.
The market’s initial optimism post-exit polls, which predicted a strong majority for the BJP, faded quickly. Indexes plunged as much as 3.7%, erasing the gains from the previous session. The volatility index soared to a peak not seen since February 2022, indicating high market tension.
TV coverage revealed that the National Democratic Alliance was leading in over 300 seats, just over the simple majority needed in the lower house. However, the leads were less substantial than markets anticipated, prompting significant volatility.
Sector-wide, the downturn was stark, with bank, infrastructure, and oil and gas stocks tumbling by up to 5.1%. Among the biggest losers in the Nifty 50 index were Adani Enterprises and Adani Ports, which dropped 9% and 8% respectively, magnifying the market’s unease.
