A wave of selling swept through the markets on Thursday as investors appeared to panic after Prime Minister Narendra Modi dropped a bombshell by claiming that two of the country’s biggest tycoons may have shovelled money to the Opposition Congress, deepening worries over the fact that the savvy industrialists may have started to hedge their bets ahead of the results on June 4.

While the Sensex plummeted over 1000 points, the Nifty fell below the 22000- level.

The selloff wiped out ₹7.34 lakh crore of investor wealth resulting in the market
capitalisation of all the firms on the BSE falling to ₹393.3 lakh crore.

Market circles said that participants have either been taking the money off the table or staying on the sidelines due to fears that the ruling BJP could win fewer seats than expected. The apprehension that the party may not get the 400+ seats as expected earlier is seen as hurting the reform momentum.

“Investors seem wary of entering the markets before the elections (results) and many are locking their gains by booking profits,” Sonam Srivastava, founder and fund manager at Wright Research, told Reuters.

This fear has resulted in the country’s volatility index climbing for an eleventh straight session to 18.20, highest since October 2022.

“We reckon that 400+ seats seem unlikely for the Bharatiya Janata Party-led alliance. The turnout so far is a tad lower and while this could affect the outcome for a few constituencies, it is unlikely to majorly dent the widely expected outcome of the BJP returning to power,” PhillipCapital India analysts said in a note.

Arun Kejriwal, director, KRIS, an investment research firm, said the stocks are under pressure due to persistent selling from foreign portfolio investors.

He added that other global factors such as a delay in the US Federal Reserve cutting interest rates, geopolitical tensions are also adding to the bearishness.

US stock indexes were muted at the open on Thursday as a slate of downbeat earnings offset the impact of data that showed US weekly jobless claims rose more than expected, indicating softening labour market conditions.

Britain’s FTSE 100 scaled a record high on Thursday after the Bank of England kept interest rates unchanged but investors cheered increasing indications that more policymakers are warming up to cutting borrowing costs soon.

“We have seen immediate reversals in the Nifty after hitting fresh highs and this tells a lot about the jitters that the market has on account of the big event,” said Abhishek Goenka, founder and chief executive of IFA Global.

The 30-share BSE Sensex ended with a steep drop of 1062.22 points or 1.45 per cent at 72404.17.

Heavyweight Reliance Industries Ltd lost 1.77 per cent to close at ₹2,786.80. On the other hand, Adani Enterprises, the flagship firm of the Adani group was down 3.26 per cent.

Campaigning for the party in Telangana on Wednesday, Prime Minister Modi sharply attacked Congress leader Rahul Gandhi by asking him why he had gone silent against Adani and Ambani even as he alleged that they received election funds from the two industrialists.

A section of the market, however, said the remarks were only poll rhetoric and it would not have any adverse impact on either of these industrial groups or their stocks.

UK rate cut hope

The Bank of England (BoE) maintained its key UK interest rate at a 16-year high of 5.25 per cent on Thursday though it gave a broad hint that a reduction could be on the cards imminently as inflation is forecast to fall below target, reports AP.