June 4, 2024
New Delhi, India
Market Turmoil as Election Results Roll In
In a dramatic turn of events, Indian stock markets faced a historic crash on June 4, 2024, as the Sensex plunged by 4,389 points and the Nifty fell by 5.9%. This severe market reaction follows the early results of the 2024 Lok Sabha elections, which indicated a significant lead for the BJP-led National Democratic Alliance (NDA).
Both the index Nifty and Sensex closed at 21,884.50 down −1,379.40
FIIs and DIIs Activity
Despite the market downturn, foreign institutional investors (FIIs) net bought Indian equities worth ₹6,850.76 crore, while domestic institutional investors (DIIs) purchased shares valued at ₹1,913.98 crore on June 3. This buying activity was unable to offset the widespread sell-off triggered by election uncertainties.
Worst Fall Since March 2020
The indices experienced their steepest decline since March 2020, erasing all gains from the previous session. Exit polls had initially boosted market confidence, projecting a decisive victory for the BJP. However, as actual results suggested a closer contest, investor sentiment rapidly deteriorated.
Sectoral Impact
The volatility index soared to its highest level since March 2022, reaching 29.79. All sectors ended the day in the red:
- Banking stocks: fell by 7.8%
- Realty sector: dropped 9.1%
- Infrastructure sector: declined 10.5%
- Oil and gas stocks: lost 11.7%
- State-run companies and banks: retreated 17% and 16% respectively
Adani Group Stocks Hit Hard
Adani Enterprises and Adani Ports were among the top losers in the Nifty 50 index, both falling by 19%. Other stocks within the Adani Group saw declines ranging from 9% to 19%. This stark reversal came after significant gains on Monday, driven by exit poll projections.
Global Market Reaction
Global markets also reacted to the Indian election results. Asian share markets retreated, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.4%. Australian shares fell by 0.15%, and Japan’s Nikkei index slipped 0.11%. In contrast, Hong Kong’s Hang Seng Index and China’s CSI300 Index managed slight gains after initial declines.
European and US Market Outlook
Early European trades saw minor declines, with Euro Stoxx 50 futures down 0.1%, German DAX futures down 0.21%, and FTSE futures down 0.09%. In the US, the S&P 500 e-minis showed a marginal rise of 0.01%.
Looking Ahead
Investors are closely watching the unfolding election results and upcoming US economic data, including the Job Openings and Labor Turnover Survey (JOLTS) and May’s non-farm payroll figures. The ongoing volatility underscores the fragile state of market confidence amid political and economic uncertainties.
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