Blood Bath On Dalal Street As Exit Polls Fall Flat On Face

Investors will be closely watching final official election results and subsequent policy announcements to better understand the long-term implications for the market

The significant drop in the indexes and the surge in the volatility index can be attributed to the market’s reaction to the projected election results.

Here’s a breakdown of the key points:

1) Market Decline: The indexes experienced their worst fall since March 2020. This decline likely reflects investor anxiety and uncertainty surrounding the projected political outcomes and their potential impact on economic policies and market stability.

2) Election Projections: Exit polls indicated that the BJP-led National Democratic Alliance (NDA) is likely to secure a two-thirds majority in the lower house of parliament. Specifically, TV channels showed the NDA ahead in nearly 300 seats, well above the 272 seats needed for a simple majority in the 543-member lower house.

3) Volatility Surge: The volatility index, a measure of market uncertainty and investor fear, jumped to its highest level since March 2022, reaching 29.79. This spike suggests that investors are bracing for potential turbulence in the markets as they anticipate the consequences of the projected election results.

4) Monday’s Gains Erased: The market decline effectively wiped out all the gains made on Monday, indicating a sharp reversal of investor sentiment.

5) At 12.13 pm, Sensex was down 4,881 points or 6.4 per cent at 71,587. Nifty 50 was down 1,558 points or 6.7 per cent at 21,705 and about 283 shares advanced, 3,060 shares declined, and 61 shares remained unchanged.

6) PSU stocks bore the brunt of the market turmoil, with the S&P BSE PSU index plunging nearly 8.14% in today’s trade to 20,701, wiping out all gains from Monday. At present, all 56 constituents of the index are trading in the red, with SJVN leading the losses with a decline of 10%, followed by HUDCO with a 7% drop.

Other stocks, including Ircon International, GAIL (India), NHPC, Bharat Dynamics, General Insurance Corporation, National Aluminium Company, REC, Union Bank of India, Punjab National Bank, UCO Bank, Bank of Maharashtra, Bank of Baroda, Life Insurance Corporation, and Bharat Heavy Electricals, are all experiencing declines ranging from 5.5% to 7%.

Top PSU losers:

Power Finance

Top PSB losers:

Bank of Baroda

Implications for Investors

Sensex closed at 72,429.58 −3,905.85 (5.11%)
Nifty closed at 21,995.85 −1,268.05 (5.45%)
  • Political Stability Concerns: A projected strong majority for the ruling alliance can lead to swift and potentially significant policy changes. Investors might be wary of these changes impacting business environments, taxation, regulation, and foreign investment policies.
  • Market Sentiment: The jump in the volatility index reflects heightened nervousness among investors. High volatility can lead to increased trading activity, as investors might seek to reposition their portfolios to mitigate perceived risks.

Expert Comment – Yesterday itself, spoke to Geetu Moza, Consulting Editor, Jagran Business on the euphoria on Exit Polls and volatility expected today. Ms. Moza said “today, the markets soared to new highs, driven by euphoria over the exit polls. Significant buying activity was observed from domestic ETFs, although Foreign Institutional Investors (FIIs) remained on the sidelines, awaiting the final outcome. Public Sector Undertaking (PSU) stocks experienced a frenzy, with most closing with substantial gains. Looking ahead to tomorrow, expect volatility with an overall uptrend still intact. If NDA crosses the 400 mark, anticipate an additional 3-4% surge. If the results align with predictions, we might see a range-bound session with some profit booking towards the end. Conversely, if the outcome is less favorable for the NDA, the markets could face sharp declines. Be prepared for potential market fluctuations”.


The market reaction underscores the interconnectedness of political developments and financial markets. The projected election results have introduced a degree of uncertainty, prompting a significant market downturn and a spike in volatility. Investors will be closely watching final official election results and subsequent policy announcements to better understand the long-term implications for the market.

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