Sell sell? Why the market doesn’t like the poll results

livemint.com:

Mint explains why. The Indian stock markets was counting on a 350-plus seat victory for the BJP and 400 for the NDA. But, unlike in the earlier two Lok Sabha polls, the BJP failed to get even a simple majority of 272 seats, and the NDA won only 291 seats.

This would make the Modi 3.0 government reliant on Chandrababu Naidu and Nitish Kumar who joined the NDA only in the past six months. There is also a feeling that the new government would have to resort to populist measures to address the distress faced by rural voters in states like Maharashtra, where assembly elections are due in six months. Many of the ‘Modi stocks’ plunged on Tuesday, eroding ₹31 tn investor wealth, the biggest-ever absolute loss.

Among them were stocks of public sector units like NTPC, infra and capex plays like Adani Ports and L&T, O&G (Reliance), which went through re-ratings premised on economic continuity and political stability. These stocks could now be under pressure with brokerages like CLSA replacing L&T with HCL Tech in its India focus portfolio. ‘Defensive’ sectors like consumer goods, pharma and IT could gain.

Kotak Institutional Equities has eliminated capital goods stocks and PSU banks from its model folio. Any delays in fast-tracking of projects like Bullet train slated for August 2026 or Navi Mumbai International Airport by March 2025 could sour market sentiment. Even after Tuesday, markets trade at a one-year forward price to earnings multiple of 19 times, a 19.5% premium to its 18-year average.