A sell-off on Indian stock exchanges got ever spicier on Tuesday morning as early election results indicated that prime minister Narendra Modi’s BJP is not on course to win the big majority that was expected.
The Sensex index was down 7.95% around halfway through the Bombay Stock Exchange session, while the broader Nifty 50 index was down 8.35% and losses on the Nifty Infrastructure index reached 11%.
By the end of the session, the Sensex index of 30 top stocks finished down 5.55%, the Nifty 50 down 5.45%, the Nifty Infrastructure index down 10.17% and the Nifty 500 ended down 6.34%.
Early indications from vote counts in what is the world's biggest election suggest Modi's coalition alliance is leading in nearly 300 seats, though the opposition alliance is performing better than expected, with gains in more than 200 seats.
A party or alliance needs to win 272 seats in the lower house of parliament to form the government, and Modi had been hoping to win a 400-seat majority.
Of the four London-listed investment trusts investing in India, listed by the Association of Investment Companies, the abrdn New India Investment Trust PLC was 5.33% lower midway through the UK session, the Ashoka India Equity Investment Trust PLC 5.09% lower, the India Capital Growth Fund Ltd (LSE:IGC) had fallen 4.28% and the JPMorgan Indian Investment Trust plc 3.28%.
The sharp falls, a reversal of gains made yesterday, were due to worries that that if Modi "has to rely on alliances with smaller parties, any market-friendly policies will be diluted", said AJ Bell investment director Russ Mould.