Nifty Midcap 100 suffers sharp decline of over 6,000 points; BEL, Container Corp, SAIL plunge up to 28%
Market downturn in India as BJP's majority in Lok Sabha election comes into question, impacting investor confidence. The Nifty Midcap 100 index plunged 6,106 points, or 11.44%, to reach a two-month low of 47,246 points. Leading the declines were Bharat Heavy Electricals, which plummeted 28%.
The Indian indices across the board turned red, marking a stark contrast to the green wave experienced in the previous trading session. This significant drop in shares was attributed to unexpected changes in the political equation, contrary to the optimistic exit poll predictions.
Tuesday's Lok Sabha election counting raised doubts about the BJP securing a majority of 272 seats on its own, causing widespread concern among investors.
According to recent data, Indian Prime Minister Narendra Modi's alliance is on track for a majority in the ongoing general election vote count on Tuesday. However, the current numbers indicate that the margin of victory might be smaller than what exit polls had predicted, causing a market downturn.
This political uncertainty has led to a sharp market downturn, with investors re-evaluating their positions in response to the unfolding political landscape.
The shift in sentiment has underscored the market's sensitivity to political developments and the crucial role of stability in maintaining investor confidence. Apart from the front-line indices Nifty 50 and Sensex, which have dropped 7% each in today's trading session, mid- and small-cap stocks also took a large beating during the trade.
Down 6000 points
The Nifty Midcap 100 index plunged 6,106 points, or 11.44%, to reach an 11-week low of 47,246 points. Leading the declines were Bharat Heavy Electricals, which plummeted 28%, and Container Corporation of India, which saw a 25% drop in its shares. SAIL also fell by nearly 25%.
UCO Bank experienced a 20% decline, and other mid-cap stocks such as JSW Energy, Mazagon Dock Shipbuilders, and Hindustan Petroleum Corporation also saw significant drops. Additionally, HDFC Asset Management Company and LIC Housing Finance each declined by 14%.
Similarly, the Nifty Smallcap 100 index fell 12.46% in today's trade, with all stocks trading in the red. Jammu & Kashmir Bank led the decline, plunging 20%.
Other notable losers included HUDCO, Titagarh Rail System, NALCO, Hindustan Copper, HFCL, NLC India, Central Bank of India, NCC, Chambal Fertilisers & Chemicals, Indian Overseas Bank, Ircon International, Gujarat Mineral Development Corporation, and CESC, all of which dropped between 12% and 20%.
Entire PSU basket turned into red
Meanwhile, 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 and resulting in a sharp drop in markets today.
Biggest intraday drop in 4 years
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. The index also witnessed one of the worst intraday drops in the last four years.
The Sensex also experienced a significant downturn, dropping nearly 6% during the trading session to hit a daily low of 71,805 points.
"Long-term investors should look out for crashes and corrections like these as opportunities to add quality stocks on dips and build on their long-term portfolios. Nifty50 rebounded almost exactly from the 200-day EMA today, so that acts as a positive from the long-term trend point of view."
"Moreover, investors are also suggested to continue their SIPs or maybe double down on the investment amount. They should not think about stopping or withdrawing their funds after seeing this crash," said Vaibhav Jain, Head of Content & Education, Share. Market.
"The market, which had begun to price in a landslide victory for the NDA, is witnessing a significant correction due to margin calls as retail investors were carrying heavily leveraged positions," said Rupak De, Senior Technical Analyst, LKP Securities.
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 making any investment decisions.
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