Indian markets suffered their worst one-day decline in about four years as the election performance of Prime Minister Narendra Modi’s ruling Bharatiya Janata Party fell short of expectations.
this nifty 50 It plunged 5.93% on Tuesday, while the BSE Sensex fell 5.74%, its biggest fall since 2020.
this All India Market Capitalization IndexOn June 4 alone, the Mumbai stock index lost more than 31.06 trillion rupees, or about $371 billion.
Tuesday’s losses meant the Sensex wiped out all its gains for the year in a single day, falling to a loss of 0.22% from Monday’s 5.85% gain so far.
Meanwhile, the Nifty 50 index is up 7% year-to-date as of Monday and is up just 0.7% since the beginning of the year.
The Bharatiya Janata Party won 240 seats in the lower house but lost its single-party majority in a tighter-than-expected campaign that will give Modi a rare third term in office.
However, the Bharatiya Janata Party-led National Democratic Alliance (NDA) managed to retain its parliamentary majority by winning 294 seats, exceeding the 272 seats needed to form a government.
In the last general election in 2019, the Bharatiya Janata Party won 303 seats and the New Democratic Alliance won 353 seats. Modi It is said Said in March that he was confident the NDA would win more than 400 seats.
The opposition Indian National Development Inclusion Alliance (INDIA), led by the Indian National Congress, won 233 seats, a much better result than expected.
Pedestrians walk past a digital broadcast showing stock prices on the facade of the Bombay Stock Exchange (BSE) on the day the results of the Indian general election were announced in Mumbai on June 4, 2024.
Puneet Paranipet | AFP | Getty Images
“Even if the majority shrinks, we do not believe macro stability will be compromised,” Goldman Sachs said in a report earlier Wednesday.
However, a weaker mandate will make it more difficult to implement structural policy changes, such as land reforms to boost manufacturing growth and agricultural sector reforms to boost agricultural productivity growth.
Goldman Sachs analysts said this was the first time in the past decade that the BJP alone ran a government without a majority in the Lok Sabha, the lower house of parliament.
The main challenge for Modi’s party will therefore be managing coalition partners who are likely to negotiate key ministerial appointments.
“We believe the government will stick to the fiscal consolidation path of 5.1% of GDP announced for this fiscal year, although we expect some spending to be reallocated to benefits,” the analysts concluded.
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