Market Meltdown: Indian stocks lag behind global peers in May – key reasons explained

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Also Read Akshaya Tritiya 2024: Gold price rises ₹40,000 in five years. Experts see up to ₹85K peak next year As per the recent media reports, a lower voter turnout so far in India's general election has raised questions about whether the ruling Bharatiya Janata Party (BJP) and its allies can achieve the landslide victory predicted by opinion polls just a month ago. Meanwhile, the sharp rally in 2023, which continued during the first quarter of CY24, has led to stretched valuations for the market, prompting investors to secure profits.

Consequently, benchmark indices, which had initially soared on the wings of optimism, logged the worst performance in May. This downturn evaporated investors' wealth at an alarming rate, leaving many startled by the sudden shift in market dynamics. Over the past five sessions, the broader market saw a majority of stocks turn red, with many of them trading close to their lowest levels in several months.

Also Read: Bear market on the horizon? Deepak Shenoy weighs in on incoming ‘doomsday’ The recent sell-off hit the public sector banks hard as they faced sector-specific challenges stemming from the Reserve Bank of India's draft guidelines on project finance. These guidelines propose that lenders allocate more funds for loans to under-construction infrastructure projects. Mid- and small-cap stocks were also hit hard in the recent sell-off.