Stock Market Today: Nifty, Sensex Log Worst Session In Over Four Years

• The local currency closed 38 paise lower against the U.S. Dollar at 83.53.

• It closed at 83.15 on Monday.

Source: Bloomberg

Indian equity market tumbled to log its worst session in over four years as poll trends indicated a closer than anticipated fight for the incumbent Narendra Modi government.

The NSE Nifty 50 closed 5.93% or 1,379.4 points higher at 21,884.5, while the S&P BSE Sensex ended 5.74% or 4,389.7 points up at 72,079.

Intraday, Nifty fell as much as 8.52% to 21,281.4, the highest intraday fall since March 23, 2020, while Sensex declined 8.15% to 70,234.4.

During the session, the Nifty 50 companies' market capitalisation loss widened to Rs 10 lakh crore, while the Nifty recorded its biggest intraday decline in over four years.

After opening at Rs 83.24, the Indian rupee depreciated 38 paise to Rs 83.53 against the US dollar.

The stock volatility gauge, India VIX, — which fell over 22% after exit polls — rose over 51% to 31.7 during the session. This is the biggest intraday jump since August 24, 2015.

This rising VIX isn't solely due to election dynamics but also due to global factors such as escalating tensions in the Middle East and rising US Treasury yields also exacerbate market concerns, according to Trivesh D, chief operating officer, Tradejini.

Shares of Reliance Industries Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Larsen & Toubro Ltd., State Bank Of India weighed on the index.

While those of Hindustan Unilever Ltd., Nestle India Ltd., Hero MotoCorp Ltd., Britannia Industries Ltd., Tata Consultancy Services Ltd., cushioned the fall.

All Nifty sectors except Nifty FMCG fell with Nifty PSU Bank taking the most by 15.1% during the session.

Broader markets underperformed benchmarks. The S&P BSE Midcap settled 8.07% lower, and the S&P BSE Smallcap closed 6.79% lower.

On BSE, 19 sectors closed sharply lower out of 20, and one settled higher. The S&P BSE Utilities was the worst-performing sector, and the S&P BSE FMCG was the top sector.

Market breadth was skewed in favour of sellers. Around 3,337 stocks declined, 500 advanced, and 97 remained unchanged on the BSE.

• Negative surprise on election results to trigger derating

• Current trends indicate that the NDA could end up with ~290-300 seats

• See Narendra Modi returning as PM but in changed circumstances

• Greater demand to stimulate consumption in the economy from both, the BJP and allies

• Broad direction of economy unlikely to change

• Factor market reforms related to land, agriculture, and labor are now off the table

• Privatization and asset monetization are also at risk

• Switch from PSUs and Capital Goods to FMCG

• Buy Indian equities if the Nifty falls below 20,000 (~18x FY25 PER)

Scenario 1:

- Modi to return as PM, but carrying alliance partners

- Govt may not function as smoothly as last 10 years

- This scenario seems most likely

Scenario 2:

- NDA forms govt, but with new prime minister

Scenario 3:

- Key alliance partners of BJP could switch sides

- This could lead to meaningful changes in govt policy trajectory

Impact on Investment Outlook

- Scenario 1 to be most positive for Indian markets

- National policy thought process could change via state elections

- Stress in mass market consumption may come into govt focus

- Country could see delays in fiscal consolidation path

- Reforms that could be placed on cold storage: Agri/food subsidy reform, land and direct tax reforms

India story should gain momentum once the uncertainty over formation of government is over, says Motilal Oswal Founder Raamdeo Agrawal. "I hope... there is mandate for NDA. Of course, it will be a weaker BJP, so the management style that was centered in Delhi will have to become much more participative," says Raamdeo Agrawal.

"As more certainty returns to the political management, I think markets will start slowly recovering," he said adding that markets have realised that they overdone yesterday. He also said that its too early to look at portfolio changes and advises to wait till budget.