Sensex crashes over 6,100 points due to disappointing early election counting trends. BSE-listed stocks’ market capitalisation dropped significantly, erasing previous session’s gains.
Election Results 2024 Sensex Crash Live Updates: Indexes saw their worst fall since March 2020, erasing Monday’s gains after exit polls projected BJP-led alliance’s likely two-thirds majority in the lower house.
TV channels showed the ruling National Democratic Alliance was ahead in nearly 300 seats. The minimum needed for a simple majority in the 543-member lower house of parliament is 272 seats.
The volatility index jumped to its highest since March 2022 at 29.79, after easing on Monday.
“Since exit polls were at an extreme, anything that doesn’t point to more strength is obviously a negative,” said Anand James, chief market strategist at Geojit Financial.
“Despite exit polls giving a resounding victory for the ruling party, the market’s volatility gauge did not go down below 20, as it was pricing in an outlier,” James added.
All sectors were in the red. Bank stocks fell 7.8%, realty dropped 9.1%, infrastructure declined 10.5%, while oil and gas stocks lost 11.7% and state-run companies and banks retreated 17% and 16%, respectively.
Adani Enterprises and Adani Ports were top losers in the Nifty 50 index, each falling 19%. Other Adani group stocks were down between 9% and 19%. The group stocks had jumped between 4% and 18% on Monday after the exit polls.
“The market fears whether current numbers will stay or reduce further. Even with the current majority, there will be some disappointment as they are below market expectations,” said Mayuresh Joshi, head of equity research India at William O’Neil and Company.
“Markets were at an all-time high, a lot of hope was built up on BJP’s majority, and these will unwind over the next few sessions. The focus will turn to policy announcements, as reforms will continue with BJP getting an absolute mandate,” Joshi said.
Asian share markets retreated on Tuesday as global investors awaited India’s official election results and considered the prospect that the U.S. economy’s ‘exceptionalism’ is starting to unwind as manufacturing activity there further weakened.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%, after U.S. stocks ended the previous session with mild gains. The index is up 2.1% so far this month.
Australian shares were down 0.15%, while Japan’s Nikkei stock index slid 0.11%.
Hong Kong’s Hang Seng Index was up 0.33% and China’s CSI300 Index up 0.23% after initially opening in negative territory.
In early European trades, the pan-region Euro Stoxx 50 futures slipped 0.1% to 5,007, German DAX futures were down 0.21% at 18,615, and FTSE futures were down 0.09% at 8,265.5.
U.S. stock futures, the S&P 500 e-minis, were up 0.01% at 5,297.8.
The strength of the U.S. labor market will be closely watched in the next few days with the Job Openings and Labor Turnover Survey (JOLTS) due to be published later on Tuesday. Non-farm payroll figures for May are out on Friday.
“We’re expecting a slight easing in demand for labor in the U.S. market,” said Raisah Rasid, JPMorgan Asset Management’s global market strategist.
“What does that mean for the Fed? All data points to one interest rate cut later in the year, potentially in December. If the data moves in a different direction than expected, that cut could be moved forward to September.”
In Hong Kong, the city’s Hang Seng Mainland Property Index rose 2.5% following a Citigroup research note upgrading the target prices for 23 Chinese property companies it covers.
“We are starting to see more green shoots in China, especially after the measures and stimulus revealed for the property sector,” said David Chao, Invesco Asia Pacific’s global market strategist.
“More measures are expected. That is helping develop a risk-on environment in Asia, emerging market Asia and equities over bonds. I think there is still more to go in the recent market rally we have seen.”
The yield on benchmark 10-year Treasury notes reached 4.4099% compared with its U.S. close of 4.402% on Monday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.8245% compared with a U.S. close of 4.818%.
On Monday, U.S. Treasury yields fell to their lowest point in two weeks, after the country’s manufacturing activity slipped for the second consecutive month in May.
The two-year yield was 6 basis points lower, while the 10-year yield was down 11 basis points.
U.S. crude dipped 0.88% to $73.57 a barrel. Brent crude fell to $77.77 per barrel. Both benchmarks slid to four-month lows on Monday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC, agreed to start unwinding some production cuts from October.
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