India’s stock market dips as expectations of Modi landslide recede

Selloff comes after polls predicting large majority for National Democratic Alliance sent stocks to all-time highs.

Indian financial markets sold off sharply as early vote counting trends suggested Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led alliance is unlikely to win an overwhelming majority as predicted by exit polls over the weekend.

“The numbers for NDA are subdued and below expectations. So we are witnessing profit booking as investors are nervous. We need to wait one more hour for greater clarity,” said Kranthi Bathini, director of equity strategy at Mumbai-based WealthMills Securities.

“But we can see profit booking continuing and extending if these trends continue,” he said.

Exit polls in the weekend projected a big win for Modi’s National Democratic Alliance (NDA), leading to markets soaring to all-time highs on Monday as investors were buoyed by expectations of sustained economic growth.

Traders said the markets were selling off on Tuesday as investors awaited more clarity on the total number seats that the NDA would win.

The Nifty index dropped as much as 3.76 percent to 22,389.85 points, while the BSE index fell to a low of 73,659.29 points, down 3.67 percent on the day. Both indexes had touched lifetime highs on Monday.

By 04:25 GMT, both markets had recovered slightly to trade down about 2 percent each.

As of Monday’s close, benchmark indexes had grown by a little more than three times in value since Modi became prime minister in May 2014.

The rupee dropped to as low as 83.4375 against the dollar versus its previous close of 83.1425. The benchmark 10-year bond yield was up 8 basis points at 7.02 percent  in early trade.

“Obviously the early results trends are not positive for the