The NDA missing the magical '400 par' turned out to be catastrophic for the stock market as it was caught off guard with the exit polls predicting a clear majority for the alliance led by Prime Minister Narendra Modi.
On a day that saw Sensex, Nifty perform its worst since the pandemic crash, the tables turned for many stocks with Adani facing the worst brunt.
A buffet of stocks that were being labelled 'Modi stocks' prior to the election results were expected to gain with market experts expecting a market rally.
However, all hell broke loose as counting of votes began. Sensex lost over 6,000 points and Nifty lost close to 2,000 points, playing spoilsport to earlier claims of the market reaching a high by PM Modi and Home Minister Amit Shah.
While most expected a market rally, investors lost approximately Rs 30 lakh crore on the day as maximum stocks traded in red barring FMCG stocks such as Hindustan Unilever, Nestle India and Britannia.
“Dalal Street experienced a bloodbath as the Nifty plunged 5.93%, with Sensex and Bank Nifty also seeing significant losses. Investors were disheartened as the BJP failed to secure a majority on its own in the 2024 Lok Sabha elections, despite the NDA achieving an overall majority," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
PSU stocks which were part of the 'Modi stocks' also couldn't withstand the market downturn as NTPC, Coal India, ONGC, etc witnessed a slump.
The volatility index also surged over 40% to reach 31.71, its 52-week-high.
Aditya Khemka, Fund Manager, InCred Asset Management said that today's action suggests the beginning of a stock picker's market and probably a prolonged pause for the passive investor.Varanasi Wealth Management
"We expect the market to be sideways in the near future and businesses with strong earnings momentum and reasonable valuations to outperform the market," said Khemka.
"Following this sharp decline, we expect continued choppiness, so participants should limit their trades and wait for stability. Investors, however, can use this opportunity to accumulate quality stocks available at good bargains," said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Amit Goel, Co-Founder & Chief Global Strategist, Pace 360 said that investors should stick to the fundamentals and buy only the stocks with reasonable valuations.
"We believe Indian equities will go into a bear market and will fall by more than 20% by April 2025. Hence, investors should buy only when the market is deeply oversold and that too for the short term to medium term only," said Goel.Jaipur Investment
He further added that there will be waves of buying and selling over the next year, and investors should buy only when they believe the wave of selling is exhausted and sell when the wave of buying seems to have exhausted itself.
"Investors would do well to avoid the sectors which were market favourites till yesterday as the focus of the government may changeSurat Wealth Management. Consumer based stocks would do well from now on as the government would try its best to repair the urban consumer and rural distress," he suggested.
Shrey Jain, Founder and CEO SAS Online - India’s Deep Discount Broker said that although 21,800 was defended on Tuesday, a move below yesterday’s low of 21,281, which coincides with 200DEMA, should be watched out for adding short positions.
"Traders should avoid aggressive directional trades in either direction. Fresh long can be initiated above 22,200 for higher targets up to 22,800. On the lower side Nifty may touch 21,000 and 20,600Udabur Wealth Management. Similar is the case with the Bank Nifty Index," said Jain.
He further added that fresh longs should be initiated above 47,700 for targets of 48,300 and 49,700. Shorts can be initiated below 45,900. It may correct to 44,000.
"Avoid buying a stock just because it has fallen in a big way, say 15-20%. Stick with a large and quality mid cap. If you are not sure about the direction of the price of the security you are trading, then it is better to wait for the trend to emerge. For investors, interim volatility can be capitalised by accumulating units of exchange traded funds tracking Nifty 50 index or Nifty50 Value 20 (NV20) index," added Jain.
The market expected BJP-led NDA to come into power, ensuring a stable government that would have allowed for continuity of economic policies.
However, with the potential Lok Sabha election results on the cards, policy continuity could face a hurdle and that could lead to a delay in execution of economic plans in the near future.
This could in turn dampen investor sentiment and lead to jitters in the stock market.
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