June 4th 2024.
On Tuesday, the stock market took a sharp turn as the initial results of the Lok Sabha elections showed that the BJP was winning fewer seats than predicted in the exit polls. This caused a major drop in the shares of all Adani Group companies, with some seeing a decline of up to 20%. Adani Ports, Adani Energy Solutions, Adani Power, Ambuja Cements, and Adani Enterprises all took a hit on the Bombay Stock Exchange (BSE). Adani Total Gas, Adani Green Energy, NDTV, ACC, and Adani Wilmar also saw significant declines in their stock prices.
This sudden drop erased the record-breaking gains that these companies had made in the previous trade. The BSE Sensex plummeted by 4,131.44 points, while the Nifty saw a decline of 1,263.3 points. This was a significant drop of 5.40% and 5.43%, respectively. Just the day before, all Adani Group companies had experienced a surge in their stock prices, with Adani Power seeing a 16% increase. This had led to a combined market valuation of Rs 19.42 lakh crore for the ten listed Adani firms.
However, Monday's rally was short-lived as the Lok Sabha election results revealed a different story. The BJP-led NDA was still ahead with leads in 296 seats, but the opposition INDIA bloc was not far behind with leads in 227 seats. This indicated a strong possibility of a third consecutive term for Prime Minister Narendra Modi, but with a stronger opposition. The BJP was leading in 236 seats, a decrease from their 303 seats in 2019, while the Congress had leads in 97 seats, a significant increase from their 52 seats in the previous election.
The acrid and acrimonious election campaign had come to an end, but it seemed that the opposition was gaining more ground. By 11:45 am, the NDA was close to the 300 mark, with the opposition INDIA bloc making significant gains. This unexpected turn of events caused a major downfall in the shares of all Adani Group companies, which had seen a surge just a few days prior. This was a clear indication of the impact that political stability has on the stock market.
It is worth noting that just three days before, on Friday, all Adani Group companies had seen a surge in their stock prices after a US brokerage firm, Jefferies, had released a bullish report on the group. The report had highlighted Adani Group's planned USD 90 billion capital expenditure over the next decade, which had sparked investor interest. However, the election results seemed to have overshadowed this positive outlook, causing a sudden drop in the stock prices of all Adani Group companies.
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