‘Rs 20 lakh crores eroded in 20 minutes’; Know why Sensex and Nifty are facing a steep decline today

The first 20 minutes of trading saw the overall market capitalisation of the BSE-listed companies drop by nearly Rs 20 lakh crore

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BSE Sensex and Nifty saw a sharp decline on June 4 in light of vote counting of Lok Sabha elections 2024.  The first 20 minutes of trading saw the overall market capitalisation of the Bombay Stock Exchange (BSE)-listed companies drop by nearly Rs 20 lakh crore, dropping to approx Rs 406 lakhby 9:35 pm from Rs 426 lakh at the close of the last session.

At 11:02 am, Sensex was at 73,386.17, down 3082.61 points or 4.03% lower. Nifty was also down at 1,008.20 points or 4.33% lower at 22,255.7. By 12:19 pm, BSE Sensex crashed by 5067.02 pts or 6.63% at 71,401.76 while Nifty declined by 7.07%.

NIFTY Bank Index, comprising 12 bank stocks, including SBI, HDFC Bank, ICICI Bank, Axis Bank and Kotak Bank, is currently down 8.88 per cent.

Why did the Sensex and Nifty crash?

While the Sensex and Nifty charts surged yesterday after the exit poll predictions, they took a sharp decline today as the results of counting differ vastly to those predicted by exit polls. The trading investors factored into the results of the exit polls, which suggested a stronger majority for the National Democratic alliance. However, the current trend vastly differs from those predictions causing widespread panic among the investors.

Dr. VK Vijayakumar, Chief Investment Strategist for Geojit Finances explained the situation saying, “The steep fall is due to the results so far falling short of the exit polls, which the market discounted yesterday. If BJP doesn’t get a majority on its own, there will be disappointment, as reflected in the market. Also, it is possible that Modi 3.0 may not be as reform-oriented as the market expected and may turn more welfare-oriented. This is getting reflected in the strength of FMCG stocks.”