It is shaping up to be a narrower win for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) and its National Democratic Alliance (NDA) than exit polls projected.
On Tuesday morning, local time, June 4, 2024, the counting of the 642 million votes cast in the Indian general election began.
As the hours went on, a surprising result began to emerge: Although the NDA seems to be winning the majority of seats in the Lok Sabha, India’s lower house, it appears that the BJP will not win a majority on its own. This is the first time in a decade that has happened.
The Indian financial markets responded unfavorably, sending Indian stocks into their biggest loss in four years, according to Bloomberg.
As of market close on Tuesday, the NIFTY 50, a benchmark index that represents the weighted average of India’s 50 largest companies listed on the National Stock Exchange, plunged by 5.93%.
The BSE SENSEX, a free-float market-weighted index of 30 prominent companies listed on the Bombay Stock Exchange, slid a comparable 5.74% throughout Tuesday.
The rupee also faced difficulties on Tuesday, trading at 0.0120 against the United States dollar, showing a drop of 0.000055, or 0.46%.
So, why are the markets responding in this way?
Well, one reason may be that if the BJP has to rely on its allies for a majority, it may lead to a more precarious and uncertain political environment than India has seen in the last decade during which Modi and the BJP have ruled the country with hegemonic, authoritative control.
Seemingly, the echoes of the unstable political coalitions that had plagued Indian politics in the past, according to Reuters, are still heard.
