June 4, 2024
New Delhi, India
Market Plunges Amid Election Uncertainty
The Indian stock market experienced a dramatic downturn on June 4, 2024, as early trends from the ongoing election results indicated a tighter race than anticipated. The Sensex dropped by 3,700 points, while the Nifty Index fell to 22,140, erasing the gains from the previous day.
Institutional Investors’ Activity
Despite significant buying activity from both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) on June 3, the market faced a sharp decline. FIIs invested ₹6,850.76 crore in Indian equities, and DIIs bought shares worth ₹1,913.98 crore. However, this was not enough to sustain market confidence.
Surge and Subsequent Decline
On Monday, the market had surged, with the Nifty 50 Index recording a 3.3% gain, its largest in over three years. This boost was driven by exit polls predicting a substantial victory for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) and its allies, expected to secure more than 350 of the 543 parliamentary seats.
Election Results Tighten
As the Election Commission of India began counting votes, early trends suggested a closer race than exit polls had forecast. This unexpected development led to a significant selloff in the market, as investors reacted to the heightened uncertainty.
Financial Impact on Investors
The market turbulence resulted in a massive loss of investor wealth, estimated at approximately ₹26 lakh crore during intraday trading. The overall market capitalisation of companies listed on the Bombay Stock Exchange (BSE) dropped from nearly ₹426 lakh crore to around ₹400 lakh crore by late morning.
Conclusion
The Indian stock market’s sharp decline underscores the significant impact political developments have on investor sentiment. The initial optimism from exit polls quickly dissipated as early election trends indicated a tighter race, highlighting the volatility and sensitivity of financial markets to political outcomes.
Disclaimer:
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