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Exit polls hit Sensex too

Sensex lost 213 pts to end at 5712.28 on political uncertainty after exit polls indicated strong gains for the Congress.
PTI | By Agence France-Presse, Mumbai
PUBLISHED ON APR 28, 2004 04:06 PM IST

Indian stocks plunged 3.60 per cent on Tuesday posting their sharpest fall in more than three years as election exit polls predicted a hung parliament and triggered fears of a delay in economic reforms, dealers said.

The BSE-30 share index -- Sensex closed down 213.30 points at 5,712.28, wiping out more than $12 billion of shareholders' wealth. Of the 30 index stocks, 27 closed in negative territory.

"It was a black Tuesday," said assistant vice president at Asit C Mehta Investments, Anish Marfatia.

"No one expected such a fall but the exit polls played the spoilsport and what we have is a depressed sentiment at least for the near term."

Investors sold across the board as exit polls by various television channels after Monday's third and possibly decisive phase of polling showed an erosion in the fortunes of the reform-friendly ruling National Democratic Alliance led by BJP and raised the possibility of a hung parliament.

"Today's fall is the sharpest since March 13, 2001 when the market fell by nearly four per cent. Since then, the market has been volatile and there have been sharp swings but not to this extent," said technical analyst at KJMC Capital Markets Sanjay Bhide.

In March 2001, the market fell when a stockmarket scam was unearthed during investigations launched against big-time broker Ketan Parekh.

"The exit polls took everyone by surprise. No one predicted the trend as prior to the polls the ruling alliance was seen cruising to victory on the back of strong economic growth. Now that is not seen happening," said Marfatia.

"This triggered large selloffs in almost all blue chips and especially state-run counters."

He said large unwinding in the derivatives segment ahead of its square off day on Thursday had also helped trigger panic in the spot market as many investors were holding positions on hopes of a comeback by the ruling alliance.

"There was an allround pressure," said dealer at KJMC Capital, Vijay Tilakraj.

"The fears of a hung parliament have triggered fears that although economic reforms would not be halted, they would be delayed -- which itself is bad."

Pre-election opinion polls suggested the ruling National Democractic Alliance (NDA), led by the Bharatiya Janata Party (BJP), would coast to an easy majority on the back of booming economic growth, leaving its opposition rival, Congress, trailing.

But the exit polls, while known in India to often be inaccurate, have shown the race may be tighter than expected, suggesting the NDA coalition could face a struggle to hit the 272-seat mark needed to form a government.

One poll, by television network NDTV, gave the NDA 235 seats while it said Congress and its allies might get 210.

Oil stock Hindustan Petroleum bore the brunt of the selloffs with the stock closing down Rs 34.75 at Rs 4377.35, Hindustan Lever closed down Rs 4.80 at Rs 146.80, software leader Infosys was down Rs 168.60 at Rs 5,735.35, Wipro was down Rs 62.70 at Rs 1,530.65, while automobile stock Tata Motors was down Rs 37.70 at Rs 480.55.

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