(News Bulletin 247) – Indian indices fell sharply on Tuesday as Prime Minister Narendra Modi will likely have to deal with a weaker majority than initially expected.
Warning shot on the Indian Stock Exchange, which is concerned about the outcome of the legislative elections in the country.
If the victory of the party of the outgoing Prime Minister, Narendra Modi, is on track, the head of government should benefit from a smaller political majority than initially expected.
Exit polls suggested a very clear lead, which also allowed the Nifty 50, one of the main indices of the Indian stock market, to gain 3.3% on Monday.
But this Tuesday the Nifty 50 fell by 5.5% and the BSE Sensex, an index of the Bombay Stock Exchange, fell by 5% at the end of the morning.
“In India, the first counts suggest a less significant victory for Modi’s ruling alliance than the exit polls on Sunday evening suggested,” summarizes Deutsche Bank.
The Adani group bites the dust
“Since the exit polls were extremely high, anything that doesn’t show stronger numbers is obviously a negative,” said Anand James, head of market strategy at Geojit Financial cited by Reuters.
According to AFP, the partial count suggests 281 seats for the BJP, the party of Narendra Modi, in the Indian Parliament, more than the 272 seats necessary for the parliamentary majority.
“The market’s fear is that the current numbers will be maintained or reduced. Even with the current majority level, there will be elements of disappointment as these numbers are lower than market expectations,” says Mayuresh Joshi, head of research. shares in India at William O’Neil and company, also cited by Reuters.
A narrower-than-expected victory for Modi’s alliance will raise questions “about the new government’s ability to carry through politically difficult land and labor law reforms seen by some investors as crucial to sustaining India’s economic growth, which is already the fastest in the world,” explains Bloomberg.
Among the stocks that are falling the most on Indian markets is the Adani conglomerate, owned by Indian billionaire Gautam Adani, an ally of Narendra Modi accused by the opposition of using his influence to win markets. Its action plunges 15%.
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