The Indian stock market, led by the BSE Sensex and Nifty50, took a sharp downward spiral plunge of over 5% on Tuesday, as the country’s opposition parties put up a strong fight against the ruling Modiled NDA government’s controversial agricultural reforms.
The BSE Sensex fell by 1,939.32 points or 5.17% to close at 35,635.02, while the Nifty50 dropped 568.20 points or 5.09% to end at 10,451.45. This is the biggest single-day fall for both indices since March 23 when they had plunged by around 13%.
The market was already under pressure due to concerns over rising COVID-19 cases in India and the possibility of another lockdown. However, the situation worsened after the opposition parties staged a walkout from the Rajya Sabha, the upper house of the Indian parliament, in protest against the two farm bills that were passed by the Modi government last week.
The bills seek to liberalize the agriculture sector by allowing farmers to sell their produce to anyone, anywhere in the country, without any restrictions. However, the opposition parties argue that the bills will hurt small and marginal farmers and benefit only big corporations.
The government has defended the bills saying that they will bring much-needed reform to the agriculture sector, which has long been plagued by inefficiencies and corruption. However, the opposition parties have vowed to continue their protests until the bills are withdrawn.
The market reaction to the protests was swift and severe, with nearly all sectors witnessing heavy selling. Banking, auto, and metal stocks were among the worst hit, with ICICI Bank, HDFC Bank, Tata Motors, and Tata Steel tumbling by more than 6%.
Experts say that the market could witness further volatility in the coming days, as the political uncertainty adds to the already uncertain economic outlook due to the pandemic.
This is not the first time that the Indian stock market has witnessed a sharp fall due to political uncertainty. In 2018, the market had plunged by more than 10% in just two months due to concerns over rising oil prices, a weakening rupee, and political instability ahead of the general elections.
However, the market had bounced back strongly after the Modi government won a decisive mandate in the elections, signaling stability and continuity in policy.
In conclusion, the Indian stock market is facing a challenging period due to a combination of factors such as the COVID-19 pandemic, global economic uncertainty, and now, political unrest. Investors would do well to stay calm and focused on the long-term prospects of the market, rather than get swayed by short-term volatility.
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Tags: Indian stock market, BSE Sensex, Nifty50, market volatility, political unrest, COVID-19 pandemic, economic uncertainty
