Indian stocks suffered their worst intraday fall since March 2020 on Tuesday, as vote counting trends in the general election suggested Prime Minister Narendra Modi's alliance was unlikely to win the overwhelming majority predicted by exit polls.
"The key question is whether BJP can retain single-party majority. If not, then would its coalition be able to deliver economic development, particularly infrastructure?," said Ken Peng, head of investment strategy, Asia, at Citi Global Wealth. "Due to the dependency on coalition partners, the upcoming NDA government may shift its focus towards a welfare-oriented approach rather than concentrating on reforms during the July budget," said Puneet Sharma, CEO and Fund Manager at Whitespace Alpha.
Foreigners, who poured a net $20.7 billion into Indian equities last year but pulled back ahead of the election, had widely been expected to turn buyers if the Modi alliance secured a decisive mandate."In our view, the important thing is that the NDA returns to form the next government, which represents policy continuity," said Mike Sell, head of global emerging market equities at Alquity in London.