Introduction
India’s stock market experienced its most significant drop since 2020 following the Bharatiya Janata Party’s (BJP) loss of its parliamentary majority. Prime Minister Narendra Modi’s party now faces uncertainty as it must rely on smaller parties to form a governing majority.
Election Results and Market Reaction
BJP’s Loss and Its Impact
The BJP, led by Prime Minister Narendra Modi, lost its parliamentary majority in the recent elections. This unexpected outcome has led to a drop in investor confidence, causing the Indian stock market to tumble.
Dependency on Smaller Parties
Modi’s BJP will need support from smaller parties to govern in the 543-member Lok Sabha, the lower house of India’s parliament. This dependency raises concerns about the stability of the government and its ability to implement pro-business policies.
Investor Sentiment
Positive Outlook on Modi’s Agenda
Investors have generally been positive about Modi’s economic policies during his decade-long tenure. His agenda includes:
- Massive infrastructure investment
- Promoting domestic manufacturing
- Attracting foreign investment
- Reducing bureaucratic hurdles
- Combating corruption
Economic Growth Under Modi
Under Modi’s leadership, the Nifty 50 index nearly tripled in value. India’s stock market capitalization even surpassed $4.3 trillion earlier this year, making it the fourth-largest in the world, surpassing Hong Kong.
Pre-Election Market Performance
Surge in Stock Prices
Before the election results, Indian stocks surged to record highs. Exit polls predicted a landslide victory for the BJP-led National Democratic Alliance (NDA), boosting investor confidence.
Modi’s Popularity and Economic Growth
Modi, despite being a polarizing figure, has overseen strong economic growth in India. His leadership has been marked by significant economic achievements, which contributed to the high expectations before the election results.
Conclusion
The unexpected election results, which saw the BJP losing its parliamentary majority, have created uncertainty among investors. This has led to a significant drop in the stock market, highlighting the challenges Modi faces in maintaining his pro-business agenda with a potentially unstable governing coalition.
Table of Contents
References
- “India election: Why Modi’s narrow win sent the stock market tumbling.” Al Jazeera. Link
