Mumbai: The equity market tanked due to expectations of a big NDA win created by the exit polls, key market participants said on Tuesday, stressing that the India story is intact from a medium- to long-term perspective. All of them said the markets will continue to be volatile for a good part of this week, and will await clarity on the exact number of seats the BJP and the NDA win to retain power and key portfolio allocations, they said.
Domestic brokerage HDFC Securities' Managing Director Dhiraj Relli told PTI that with a seat tally of about 240 seats with the BJP and under 300 for the extended NDA, Prime Minister Narendra Modi will not be able to carry forward reforms on land, labour, and agriculture.
The progressive steps on such critical aspects will "go on the backburner", Relli said. He was also quick to add that this will not directly impact the capital markets.
The new government, most likely to be an NDA-led coalition, will have to forego the "intensity" of implementing the promises made in the manifesto, he said, adding that Tuesday's 5.74 per cent fall in the benchmark was a "knee-jerk" reaction after the euphoria created by the exit polls, which showed Modi regime continuing with over 350 seats.
A Balasubramanian, the Managing Director and Chief Executive of Aditya Birla Sun Life AMC, concurred saying the poll outcome came as a surprise for investors who were expecting a comfortable win for Modi. He told PTI that the change in power dynamics will have to be watched closely, and stressed that the equity market's reaction to the results should not make anyone doubt the India story, which remains intact from a medium- to long-term perspective.