Traders in Mumbai were left reeling on Tuesday as India began tallying votes from a seven-week election and it became clear that the government of Narendra Modi was not performing as well as expected. The markets took a hit, with a 6 percent drop by the end of trading, nearly wiping out the year’s gains.
India’s stock market had been thriving, fueled by economic growth and confidence in Modi’s leadership. Investors had high hopes for a third term for Modi, known for his pro-business policies. However, as the election results unfolded, it became evident that the outcome was not as certain as previously thought.
Some companies, particularly those known as “Modi stocks,” saw significant losses as the election results came in. The Adani Group, once hailed as a success story under Modi’s government, faced a steep decline in its stock value. Adani Enterprises, the group’s flagship company, saw a 19 percent drop in its value on Tuesday.
Despite the market turbulence, Modi has secured enough seats to form a new government, albeit with a slimmer majority than anticipated. Global investors had been eager to tap into India’s potential, leading to a lack of bargains in the market. However, some experts believe that a correction in the market might be beneficial, especially for professional investors.
India’s economy has shown resilience in the past, thriving under various political conditions. Even in the face of market uncertainty, many believe in the long-term growth prospects of India’s economy. While the recent market downturn may have come as a shock to traders, there is optimism that India’s economy will bounce back due to its inherent momentum.
As the dust settles on the election results, investors will be closely watching how the new government’s policies will impact the market. Despite the initial shock, many remain hopeful for India’s economic future, buoyed by its track record of growth and resilience.
