Sensex suffers record-breaking intraday fall: What lies ahead for investors
The Sensex experienced a historic intraday drop of over 6,100 points on Tuesday. This unprecedented fall was triggered by early counting trends indicating a lower-than-expected seat count for the Narendra Modi-led National Democratic Alliance (NDA). The total market capitalization of all BSE-listed stocks plummeted by nearly ₹21.5 lakh crore in late morning trading, marking the largest intraday fall in four years.
Market reactions to lower-than-expected NDA seat count
The market had previously anticipated around 350 seats for the NDA based on exit poll results. "If it falls below 300 then it would be a big disappointment for bulls," stated Kranthi Bathini of WealthMills Securities. Despite this, some analysts believe that the market could be overreacting to early trends. Veteran investor Deven Choksey expects the market to stabilize and high-beta stocks to be bought as counting progresses under VVPAT.
PSU stocks and "Modi stocks" among worst hit
The Nifty PSU Bank index was particularly affected, crashing over 11% with all stocks in the index seeing double-digit losses. Other PSU stocks like PFC, REC, and BEL fell up to 20%. The fear gauge India VIX jumped 40% to 29.79, recording its biggest single-day gain in nine years. If the market continues to fall, high-flying PSU stocks and those labeled as "Modi stocks" are likely to be among the worst hit.
Analysts advise caution amid market volatility
Despite the market's volatility, analysts suggest that elections may not impact the market in the long run as investors shift their focus back to fundamentals, growth outlook, and company earnings. However, Vinnaayak Mehta of The Infinity Group warned new investors about the cyclical nature of market movements and potential for substantial losses during corrections. He emphasized thorough research and effective risk management before making any investment decisions.
