The Indian stock market witnessed a significant downturn ahead of the much-anticipated June 4 election results, reflecting early trends suggesting a potential shift from the emphatic victory predicted by exit polls for the NDA coalition. This reversal in market sentiment led to a 3 percent drop in both the Sensex and Nifty 50 indices.
Deven Choksey, MD of DRChoksey FinServ believes that the market is reacting with just two rounds of counting done. Also, due to physical counting under VVPAT, the process is slower this time around.
He expressed concern over the market's response, highlighting the uncertainty prevailing among traders, particularly those holding positions based on anticipated election outcomes.
However, he emphasised that long-term investors were unlikely to make hasty decisions in response to the market volatility, as the fundamental prospects of the economy and corporate sector remain intact despite the election outcome.
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Today's trading session saw high-flying stocks from the previous day, including Adani Group stocks and PSU stocks, facing intense selling pressure. This volatile environment posed a challenge for traders, who sought to navigate the rapidly changing market dynamics amidst uncertainty surrounding the election results.
According to the Choksey, market will once again stabilize, and the same high beta stocks will be bought. "Stocks like Adani Enterprises and SBI are relatively better," he said.
It is worth noting that the mammoth exercise to count votes polled for the Lok Sabha seats in the 2024 elections began at 8 am. The majority of exit polls forecast a re-election of Prime Minister Modi, marking him as the first PM since Jawaharlal Nehru to likely secure a third consecutive term with full majority.
According to the News18 Mega Exit Poll, the BJP-led NDA is anticipated to achieve an improved tally of approximately 350-377 seats. Early leads show BJP-led NDA leading in 304 seats.
Choksey suggested that for investors, a potential aggressive sell-off by traders could present an opportune moment to enter the market, given the resilience of the economy and corporate sector fundamentals.
"Despite the potential for a slightly reduced majority for the BJP, the fundamentals of the economy and its prospects remain unchanged. This much can be confidently stated at this juncture," he said.
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