In a sharp reversal from the previous day’s record highs, banking stocks witnessed a massive selloff on Tuesday as investors rushed to book profits amid the unfolding and unpredictable Lok Sabha election results.
Leading the plunge were state-owned lenders like Bank of Baroda and State Bank of India whose shares tanked over 15% and 13% respectively. Bank of Baroda shares plummeted to Rs 251.15, down 15.34% while SBI cracked to Rs 787.80, shedding 13.03% in value.
Private sector banks too were not spared from the carnage – ICICI Bank tumbled 6.93% to Rs 1,079.85, Axis Bank declined 7.43% to Rs 1,133.15 and IndusInd Bank dropped 8.10% to Rs 1,406.05 as of 1:32 PM.
The massive selloff in banking counters reflected the prevailing anxiety in the markets which are reacting to the Lok Sabha election trends that are diverging significantly from the exit poll predictions on Monday.
As per the latest updates from the Election Commission, the ruling BJP-led NDA is underperforming the exit polls and struggling to cross the majority mark of 272 seats, while the opposition INDIA alliance is faring better than expected.
This has raised worries about the prospects of a fractured mandate and political instability, triggering a wave of profit booking across sectors. The 30-share BSE Sensex was trading over 5% lower at 72,464 levels as of 1:42 PM, while the Nifty tanked over 1,191 points to 22,072.
Analysts believe the underperformance of the banking pack is particularly worrying as it signals concerns over the future trajectory of reforms and policies under a new regime at the Centre.
Investors are adopting a cautious stance until greater clarity emerges over the eventual poll outcome and shape of the next government that will determine the economic policies going forward.
As official counting continues, all eyes are on the final tally and how the political formations stack up against the exit polls that had predicted a considerably better showing for the ruling BJP alliance.