India's stock markets and India stocks trading on U.S. markets steadied on Wednesday, clawing back some of Tuesday's sharp losses, as its incumbent prime minister suffered a huge election setback.
Indian Prime Minister Narendra Modi declared victory in the latest general elections on Tuesday, but his Bharatiya Janata Party (BJP) failed to deliver the expected landslide victory.
Exit polls on Monday had suggested Modi would win an outright majority to form the new government. But vote counting trends on Tuesday showed his party losing dozens of seats. Modi's BJP is now seen winning 240 seats out of 543, far short of its 303 seats in 2019 and also short of the 272 needed for a clear and simple majority. Opposition parties did better than predicted.
The election results shocked the markets Tuesday, raising the specter of a BJP-led coalition government, and clouding the outlook for India's growth and Modi's reform policies.
Modi, who is seeking a third consecutive term, has pledged to make the country a more competitive global manufacturing hub vs. neighboring China.
India's stock indexes steadied on Wednesday, making a modest advance. The Nifty 50 stock index sank 8.5% on Tuesday, its biggest single-day decline in more than four years. The BSE Sensex stumbled 5.7%. Both had jumped on Monday on expectations of a clear Modi win.
India Stocks Sink On Likely Narrower Modi Win
U.S.-traded shares of ICICI Bank gained 2.9% on the stock market today. Shares sank 9% below the 50-day moving average on Tuesday after jumping 5.9% on Monday. HDFC Bank climbed 3.5 Wednesday. Shares dived 9.3% below the 200-day and 50-day moving averages on Tuesday after soaring 5.8% on Monday.
On Monday, ICICI stock snagged a 52-week high and HDB stock hit its best level since January.
Among other India stocks, Infosys, MakeMyTrip and Dr. Reddy's Labs advanced on Wednesday.
In the Indian markets, the so-called public sector units, especially banking, tumbled on Tuesday as investors grew more pessimistic about a landslide Modi win. Both HDFC and ICICI are private-sector banks.
The seven-phase Indian general elections ran April 19-June 1, with results due Tuesday. The country is now the world's most populous nation after overtaking China in 2023.
Many Western multinationals, including Apple and Walmart, have a large footprint in India. Some of those operations focus on research and development, while others like the iPhone maker also running factories there with contract manufacturers.
Modi flaunts a business-friendly image, which has endeared him to many in India and abroad. But he was accused of anti-Muslim rhetoric on the campaign trail, and was previously tied to riots in Gujarat state, which killed more than 1,000 people died in 2002, mostly minority Muslims.
