A sharp selloff in the Indian stock market on Tuesday, June 4, resulted in a significant loss for investors, wiping out approximately ₹26 lakh crore in intraday trade. The overall market capitalisation (mcap) of companies listed on the BSE plunged to nearly ₹400 lakh crore around 11:05 am, down from nearly ₹426 lakh crore at the close of the previous session.
The selloff occurred after early election trends indicated a closer result than exit polls had predicted. The Sensex and Nifty 50 benchmarks each dropped 5%, while the BSE Midcap and Smallcap indices also fell over 5% during intraday trading. Experts noted that the stock market had already priced in a decisive majority for the NDA based on exit polls. However, the early trends suggesting a tighter race led to investor panic.
Avinash Gorakshkar, Head of Research at Profitmart Securities, stated, “This sharp fall in the Indian stock market is mainly due to the disappointing early trends in the Lok Sabha election results. This trend is not in sync with the exit poll. This has put some panic in the market.”
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, added, “The steep fall is due to the results so far falling short of the exit polls, which the market had already discounted. If the BJP doesn’t secure a majority on its own, there will be disappointment, as reflected in the market. Additionally, there is concern that Modi 3.0 may focus more on welfare programs rather than the economic reforms the market expected, which is reflected in the strength of FMCG stocks.”
At around 10:10 am, the Nifty 50 was down 4.67% at 22,177, and the Sensex was down 4.96% at 72,674. At that time, the overall market capitalisation of BSE-listed firms was nearly ₹400 lakh crore.
In contrast, the previous session saw the Sensex and Nifty 50 post robust gains in anticipation of a solid majority for the NDA.
