Markets suffer worst single-day fall in 4 years

New Delhi: Equity investors suffered a massive loss of Rs 31 lakh crore on Tuesday as markets went into a tailspin with the BSE Sensex tumbling nearly 6 percent as vote counting trends showed the BJP may not have a clear majority in the Lok Sabha polls.

Erasing the record-rally of the previous trade, the 30-share BSE Sensex cracked 4,389.73 points or 5.74 percent to settle at 72,079.05. During the day, the benchmark tanked 6,234.35 points or 8.15 percent to hit a nearly five-month low of 70,234.43.

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Markets had previously declined by over 13 percent on March 23, 2020 when lockdown was imposed due to the COVID-19 pandemic.

In line with weak trend in equities, the market capitalisation of BSE-listed companies eroded by Rs 31,07,806.27 crore to Rs 3,94,83,705.27 crore (USD 4.73 trillion) on Tuesday.

Following the huge rally in equities on Monday, the market capitalisation of BSE-listed firms had climbed Rs 13,78,630.4 crore to hit an all-time peak of Rs 4,25,91,511.54 crore (USD 5.13 trillion).

"BJP falling short of a complete majority won't stop NDA from forming a new government along with its key allies. Stock markets have been expecting a complete majority for the BJP and a thumping victory for the NDA. Exit polls too cemented the expectations. Markets had factored in the best possible outcome and valuations are rich.

"However, the market is aware of the challenges associated with coalition government. Now with election results not being one-sided, we are witnessing profit-booking. We believe this profit-booking may continue for some more time," Siddarth Bhamre - Head of Research, Asit C Mehta Investment Interrmediates Ltd, said.

On May 16, 2014, the market capitalisation of BSE-listed companies stood at Rs 80,63,812.03 crore, while it was Rs 1,50,17,577.28 crore on May 23, 2019.

In ten years, the market capitalisation of BSE-listed firms have grown exponentially by Rs 314.19 lakh crore.

On Tuesday, among the 30 Sensex companies, NTPC plunged over 15 percent, while State Bank of India tanked more than 14 percent, Larsen & Toubro tumbled over 12 percent and Power Grid dived more than 12 percent. Tata Steel, IndusInd Bank, Axis Bank, Reliance Industries, JSW Steel and Bharti Airtel were the other big laggards.

On the other hand, Hindustan Unilever jumped 6 percent while Nestle climbed 3 percent. Tata Consultancy Services, Asian Paints and Sun Pharma also emerged as the gainers.

In the broader market, the BSE midcap gauge tanked 8.07 percent and smallcap index plunged 6.79 percent.

Among the indices, utilities dived 14.40 percent, power tumbled 14.25 percent, oil and gas by 13.07 percent, services by 12.65 percent, capital goods by 12.06 percent, energy by 11.62 percent and metal by 9.65 percent.

"The unexpected outcome of the general election sparked a wave of fear selling in the domestic market, reversing the recent substantial rally. Despite this, the market maintains its expectation of stability within the coalition, led by BJP as the major election winner, thereby mitigating substantial downside in the medium-term.

"This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy," said Vinod Nair, Head of Research, Geojit Financial Services.

As many as 3,349 stocks declined while 488 advanced and 97 remained unchanged on the BSE.

Also, 292 stocks hit their 52-week low, while 139 reached their one-year peak.

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