Markets in Meltdown 🫠: ₹31 Lakh Crore Lost

Hello,
Mayhem? Meltdown? Pandemonium? Choose your adjective as markets reacted to the shocking news that the BJP fell short of a majority in the Lok Sabha elections. Exit polls on Monday had predicted a sweeping NDA majority of 350-360 seats, boosting markets to new highs. However, the actual results diverged significantly, causing a massive market downturn yesterday, with investors losing nearly ₹31 lakh crore.

Much of yesterday's news focused on the Lok Sabha election results and their impact on the Indian stock market. As a result, today's market section will be more detailed compared to previous issues due to next-to-nothing happening elsewhere.

Markets

• A massive selloff swept through the Indian stock market on Tuesday, June 4, driven by vote-counting trends that diverged significantly from exit poll predictions.

• As vote counting progressed, it became clear that the Bharatiya Janata Party (BJP) was unlikely to secure a clear majority, while the BJP-led National Democratic Alliance (NDA) appeared set to achieve only a slim majority to form the central government.

• This led to the Nifty 50 experiencing its largest percentage drop in over four years, the steepest since May 2020 during the early days of the COVID-19 pandemic. The market's volatility index, India VIX, surged by 27%, reflecting heightened market anxiety.

• Investors saw a massive ₹31 lakh crore wiped out in a single day, with the overall market capitalization of BSE-listed companies plummeting from nearly ₹426 lakh crore to about ₹395 lakh crore.

• Approximately 300 stocks, including major companies like Bajaj Finserv, HDFC Life, IDFC First Bank, LTIMindtree, SBI Card, and Zee Entertainment, reached new 52-week lows during intraday trading on the BSE.

• The Nifty PSU Bank index plummeted by 15.14%, making it the biggest loser among the sectoral indices (NSE). It was followed by Nifty Oil & Gas, which declined by 11.80%, and Nifty Metal, which dropped by 10.63%.

• Only the Nifty FMCG index bucked the trend, closing 0.95% higher.

Notable Gainer & Loser
Source: Moneycontrol, All stocks listed on NSE

Because of the absolute mayhem in the markets yesterday, focusing on only one or two stocks would not have given a clearer picture of the landscape. So, in today’s edition, we have listed category-specific stocks that were affected by the Lok Sabha elections.

Fast-Moving Consumer Goods (FMCG) Stocks

The rise in FMCG stocks is fuelled by expectations of a government policy shift towards welfare-focused initiatives over reforms.

Investors anticipated increased spending on social welfare programs, which could boost consumption of essential goods and stabilize demand for FMCG products. This optimism drives investment into defensive stocks like FMCG companies, perceived as resilient during economic uncertainty.

• Dabur India Ltd +6.46%

• Hindustan Unilever Ltd +5.78%

• Colgate-Palmolive (India) Ltd +4.53%

• Britannia Industries Ltd +3.33%

• Nestle India Ltd +3.27%

• Marico Ltd +3.18%

Adani Stocks

Adani Group stocks, including Adani Ports, Adani Power, and Adani Enterprises, plunged by huge amounts following significant recent gains.

This decline contributed to roughly Rs 3 lakh crore being wiped out from Adani Group firms alone, out of the Rs 30 lakh crore erosion in market capitalization across all listed companies on the BSE.

• Adani Ports and SEZ Ltd (21.25%)

• Adani Energy Solutions Ltd (20.00%)

• Adani Green Energy Ltd (19.43%)

• Adani Enterprises Ltd (19.07%)

• Adani Total Gas Ltd (18.53%)

• Adani Power Ltd (17.55%)

IPO / FPO / Issuances

This week’s mainboard IPO schedule

• The Kronox Lab Sciences IPO has been oversubscribed by 24.57 times. (BS)

• The IPO of travel aggregator Ixigo is set to open on June 10. (Moneycontrol)

• Ajax Engineering, backed by Kedaara Capital, reportedly plans to launch an IPO in India. (Moneycontrol)

• PNB plans to launch the Canara HSBC Life Insurance IPO, intending to divest a 10% stake. (BS)

M&A / PE

• Cintra has received approval from the CCI to acquire a 24% stake in IRB Infra Trust. (BS)

• Tata Motors Finance is set to merge with Tata Capital through an NCLT scheme of arrangement. (BS)

• InsuranceDekho is reportedly in discussions to acquire BankSathi, a credit marketplace. (ET)

• Investmint, a trading app, has suspended its services and is exploring a potential merger or acquisition deal. (EN)

• Tata Motors' board has approved the incorporation of a new wholly-owned subsidiary for its commercial vehicle business. (BS)

VC