Will PSU stocks face more sell-off pressure after a 25% drop?

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REC, PFC, and Bharat Heavy Electricals, each witnessing losses of up to 25.19%.Nearly 52 stocks within the index concluded today's session with losses ranging between 10% and 20%.Also Read: Nifty Midcap 100 suffers sharp decline of over 6,000 points, hits 11-week lowPSU and capital goods stocks have been on an upward trajectory, fueled by initiatives such as Make in India, a rise in capital expenditure, and the government's emphasis on revitalizing the banking sector. These sectors have witnessed robust performance in recent times.

However, concerns regarding political continuity have impacted investor sentiment, leading to a sharp decline in these stocks.According to recent data, Indian Prime Minister Narendra Modi's alliance is on track for a majority in the ongoing general election vote count on Tuesday. However, the current numbers indicate that the margin of victory might be smaller.Also Read: Multibagger PSU stocks including PFC, REC, RVNL fall up to 25%This suggests that Prime Minister Modi may have to run a coalition government for the first time.

Market sentiments turned sour on this expectation, as policy-related decisions in a coalition government cannot be made by the BJP alone. They would need the agreement of coalition partners, raising concerns about potential delays and compromises in decision-making, a scenario that has not been prevalent over the past decade."It is likely that Narendra Modi will return as PM for a third term.

However, he will have to contend with changed circumstances. First, the BJP will be dependent on regional allies like Telugu Desam and Janata Dal (Secular) and make policy adjustments accordingly.""Second, there will be greater demand to stimulate consumption in the economy from