Indian elections pressure on the stock market is the worst in 4 years and analysts believe that fundamentals are still on the rise.

Reuters news agency reported on the movement of the Indian stock market amid the counting of general election votes today (June 4). The Nifty fell 8%, its lowest level in four years, after the preliminary vote counting results arrived around 7:00 pm. An hour according to Thai time indicates this. The National Democratic Alliance, the government coalition led by Prime Minister Narendra Modi, is expected to win a third term, but it “may not win,” a Bloomberg tally showed, as it leads by 271 votes to only 220 votes, 543 votes in… Parliament.

Although the results of the “primary” elections did not meet previous expectations that the NDA would obtain a majority of more than 300 votes, this could easily prevent the government from implementing aggressive national reform policies. Until investors are prompted to sell shares, many analysts view it as merely a fundamental market reaction.

After the Indian stock market learned the direction of the election results in the morning, it caused the Nifty index to fall by 8%. After that, the stock market gained purchasing power and returned to stability in the afternoon trading, with the Sensex closing down 4,390 points, or 5.93%, at 21,884.50 points, while the Sensex closed down 4,390 points, or 5.74%, at 72,079.05 points.

Kaurav Dua, Senior Vice President and Head of Capital Markets Strategy, Sher Khan revealed to Al Jazeera that although the results of the initial vote counting are not positive for the market, as long as the coalition leaders are able to win a majority of 272 seats (2 out of 3) to form the government . The negative reaction in the stock market will be short-lived.

Umesh Kumar Mehta, Chief Investment Officer, SAMCO Mutual Fund After reversing views after counting more than half of the votes, it is important for the NDA to return to form the next government, which indicates the continuity of politics. So, whether it's 20 wins or 120 wins, in the end a win is a win. This reinforces that India's infrastructure continues to grow positively.

Election results highlight Indian stock market as a rising star

Meanwhile, Mike Sale, Head of Emerging Markets at Quality, said India's macroeconomic outlook remains better than other major markets, with rapid price adjustments attracting investors' attention.

The Indian stock market has grown rapidly to become the fourth largest market by market capitalization in the world with more than 3 million trading accounts every month in the past few years. This indicates a significant increase in the number of individual investors in the stock market. In addition, mutual funds receive more than $2 billion per month through long-term stock allocation plans. This indicates growing interest from institutional investors.

However, Manish Bajwa, director of the Straits Fund and Investment Management in Singapore, told Reuters: Foreign investors are watching the results of these elections closely. A stable government would encourage investment flows into India.

But on the other hand, if Modi does not win the majority, we may see the Indian stock market reverse its previous upward trend. The rupee is expected to continue to fall as well, and in addition, this may lead to higher bond yields and volatility as the market reassesses Indian policy.

Investors expect the Modi government to remain committed to transforming the country into a manufacturing hub. It's a program used to lure foreign companies, including Apple and Tesla, to start production as they expand outside China.