Share Market Crash: Nifty PSE index tumbled over 19 percent in trade on June 4, as the markets are factoring in the less than favourable outcome for the Narendra Modi-led National Democratic Alliance.
Earlier, market experts were factoring in political and policy continuity - as being captured in the exit polls - which would have led to the continued outperformance of these public-sector shares.
"The steep fall is due to the results so far falling short of the exit polls which the market had discounted yesterday. If BJP doesn’t get a majority on its own there will be disappointment and this is getting reflected in the market," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
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The Nifty PSE index crashed over 14 percent, with all its constituents trading in the deep red.
BHEL, REC, PFC and Bharat Electronics slipped 15 percent, with trading temporarily halted in these stocks. These stocks had hit their circuit breaker limit of 15 percent, following which trading was paused.
SAIL, GAIL, Coal India, Power Grid, ONGC, Container Corporation of India, Hindustan Aeronautics tumbled around 10 percent each.
If the NDA coalition returns to power with a large majority, brokerages believed that government would continue with its economic agenda of development, growth and liberalisation and focus on investment-led growth during its third consecutive term in power.
With India moving from the reform cycle to the execution cycle, continuity of power remains a crucial driver for the sustainability of the macrocycle. However, the shaky early lead numbers have spooked the markets. Ahead of the elections, PSU stocks had been on a tearaway rally, with the BSE PSU index more than doubling over the past year.
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