Indian stocks suffered a severe downturn, marking one of the steepest declines witnessed in the last four years. The market sentiment shifted dramatically as the early leads during Tuesday's Lok Sabha election counting raised doubts about the BJP securing a majority of 272 seats on its own.
This abrupt turn to negativity sent shockwaves through the market, prompting investors to reassess their positions amid heightened uncertainty. Stocks from all counters were suffering during the day, with PSU stocks beating the others.
Today's trading session witnessed a significant downturn in multibagger PSU stocks like Power Finance Corporation (PFC) and Rural Electric Corporation (REC), each plummeting by 25%. PFC dropped to ₹416 apiece from Monday's close of ₹554.80, while REC tumbled to ₹450.40 from its previous high of ₹607.80 per share.
Other multibagger PSU stocks such as RVNL, IRFC, RailTel Corporation, and IRCON International also experienced declines of up to 15% during today's trade. Additionally, defence PSU stocks like Mazagon Dock, Cochin Shipyard, and Bharat Dynamics saw losses of up to 15% in their share values.
The entire PSU sector took a hit, reflected in all PSU sectoral indices trading in the red with cuts exceeding 15%. Notably, Nifty CPSE was down by 20%, Nifty PSU Bank by 19.52%, Nifty PSE by 20% to hit a 2-month low, and S&P BSE PSU by 17.37%. Meanwhile, BSE Power also recorded a significant decline, tumbling over 13% amidst the market turmoil.
Investor concerns are mounting about the BJP securing a majority, potentially leading to uncertainty in the political landscape, resulting in a sharp drop in markets today.
Meanwhile, other PSU stocks such as Oil and Natural Gas Corp., Coal India, NTPC, NLC India, Power Grid Corporation, Oil India, SJVN, NHPC, and NBCC (India) have all declined between 13% and 20%.
In the PSU banking sector, all 12 constituents of the Nifty PSU index tumbled between 14% and 20% in today's trade. Bank of Baroda led the losses with a drop of 19.6%, followed by Punjab National Bank, Canara Bank, Union Bank of India, Central Bank of India, Punjab & Sind Bank, Indian Overseas Bank, Bank of India, UCO Bank, Bank of Maharashtra, State Bank of India, and Indian Bank, all of which fell between 14.4% and 19%.
"The steep fall is due to the results so far falling short of the exit polls, which the market had discounted yesterday. If the BJP doesn’t get a majority on its own, there will be disappointment, and this is getting reflected in the market," said Dr. V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services.
"As the trends are emerging, the land slide victory as predicted by the exit polls does not seem to be happening. This is likely to make the government have second thoughts about the difficult economic reforms, and the same may not be as aggressive as earlier anticipated. However, the emphasis may shift partly to ground-level welfare schemes and employment generation."
The overall growth trajectory may however remain stable with a emphasis on infrastructure development, which may emerge as a consensus strategy in the long run," said Jyoti Prakash Gadia, Managing Director at Resurgent India.
Looking at the front-line indices, the Nifty 50 relinquished all of Monday's gains, plummeting 7.6% in today's intraday trade to reach a one-month low of 21,481 points, while the Sensex also experienced a significant downturn, dropping nearly 6% during the trading session to hit a daily low of 71,805 points.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
