The aftermath of the 2024 Lok Sabha Election results has sent shockwaves through the Indian stock market, with new-age tech stocks bearing the brunt of the downturn. Following a surge in market optimism on Monday, fueled by exit poll projections favoring the Bharatiya Janata Party-led National Democratic Alliance (NDA) and Prime Minister Narendra Modi’s anticipated victory, Tuesday’s reality painted a starkly different picture.
Tech Stocks Take a Hit
In a dramatic reversal of fortune, the majority of Indian new-age tech stocks experienced significant declines on Tuesday, June 4th. The Indian stock market witnessed a staggering crash, plummeting by around 4,000 points, consequently impacting tech stocks adversely. By 11:30 AM IST, the 23 new-age tech stocks monitored under Inc42’s coverage suffered declines ranging from 1% to over 10%.
Exit Poll Optimism vs. Election Day Realities
The disparity between exit poll projections and actual election results proved to be the catalyst for the market turmoil. Initial exit polls had buoyed investor sentiment, propelling the Sensex to a 3.39% increase to 76,468.78 and the Nifty50 to a 3.25% gain to 23,263.90 on Monday. However, as vote counts trickled in on Tuesday, indicating a significant variance from the exit poll forecasts, market sentiment took a nosedive.
Market Turbulence and its Consequences
By 11:30 AM IST, the Sensex had plummeted by 3,278 points or 4.28%, settling at 73,321, while the Nifty50 crashed by almost 1,074 points or 4.61% to 22,233.35. This downward trajectory persisted throughout the day, exacerbating concerns among investors.
Identifying the Hardest Hit
Among the new-age tech stocks, several notable companies bore the brunt of the market downturn. TBO Tek, despite its recent IPO success, witnessed a substantial decline of 10.4% to INR 1,296.9 on the BSE. Similarly, Awfis and Nazara Technologies experienced declines of 8.5% and 7.6%, respectively, compounding the broader market slump.
Challenges for Industry Giants
Established players like Paytm faced intensified pressure, with regulatory issues exacerbating the impact of the market downturn. Paytm’s stock tumbled by 5% to touch the lower circuit at INR 357.2 on the BSE. Other major companies such as Mamaearth, Nykaa, and Delhivery also saw declines ranging between 5% and 7%.
Broader Market Effects
The market downturn reverberated across various sectors, with companies like RateGain, Zomato, PB Fintech, Do Digit, EaseMyTrip, and CarTrade witnessing declines between 3% and 4%. Amidst this turmoil, Yatra emerged relatively unscathed, experiencing a modest decline of 1.5%.
Expert Insights
V K Vijayakumar, chief investment strategist at Geojit Financial Services, attributed the steep market fall to the disparity between exit poll expectations and election outcomes. He highlighted the potential for disappointment if the BJP fails to secure a majority and speculated on the implications of Modi 3.0 potentially shifting focus away from reforms towards welfare-oriented policies.
The Bottom Line
As of 11:30 AM IST, the collective market cap of new-age tech stocks stood at $49.86 billion, underscoring the magnitude of the market turbulence triggered by the 2024 Lok Sabha Election results. Moving forward, investors are poised to navigate a landscape fraught with uncertainty, with the election outcome poised to shape market dynamics in the days to come.
