The uncertainty fueled by assembly election results for Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram, along with the sudden resignation of Reserve Bank of India (RBI) Governor Urjit Patel on Monday has left the stock market in a tizzy. On Tuesday, the Bombay Stock Exchange (Sensex) opened at 34,645,.12, and registered a slump of 305.60 points.
The effect of RBI Governor Urjit Patel's resignation was felt on the market on Monday itself as the Sensex slumped by more than 700 points and closed below the 35,000 mark. On the other hand, NSE Nifty too closed below 10,500 points. Besides this, Rupee forwards posted their biggest daily slump in more than five years on Monday after Patel's resignation.
Last week itself, experts had already warned that markets will have to bear the double whammy of uncertainty arising out of assembly election results for five states and negative global factors like the US-China face-off. What made matters worse for the markets was the sudden resignation of RBI Governor Urjit Patel on Monday, after a long-drawn battle of disagreements with the Narendra Modi government.
Reacting sharply to Patel's resignation, former Prime Minister Manmohan Singh said RBI Governor Urjit Patel’s sudden decision to step down is a "severe blow" to the economy. "Patel's sudden resignation, at a time when the Indian economy is faced with many headwinds is very unfortunate and is a severe blow to the nation's economy," he said in a statement.
MARKET AND ASSEMBLY ELECTIONS RESULTS
The exit polls conducted by various agencies on the five states that went to polls--Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram--had predicted that the ruling Bharatiya Janata Party (BJP) will be unseated from power and Rajasthan and Chhattisgarh. In Madhya Pradesh, the exit polls predicted a neck and neck fight between the BJP and the Congress, while some exit polls giving Congress an edge. In Telangana, K Chandrashekhar Rao-led Telangana Rashtra Samithi was predicted to win a second time and the