The Sensex and Nifty erased all their intra day gains today after PM Narendra Modi-led BJP struggled to reach the halfway mark of 112 seats to form the next government in Karnataka. The BJP won 104 seats after counting for 222 seats was concluded for Karnataka Assembly elections today. The Congress was able to retain 78 assembly seats with JDS winning on 38 seats. Independent candidates won on two assembly seats. All three parties were exploring options to form a coalition government in the state when counting for the election came to an end in the evening.
While the Sensex closed 12 points lower to 35,543, Nifty stood at 10,801, down 4.75 points. Of 30 Sensex stocks, 16 ended lower.
The Indian rupee too followed the stock market and fell below the 68 mark for the first time since January 2017, closing at 68.07 level. The currency opened lower by 17 paise at 67.68 per dollar today against previous close of 67.51.
Jaikishan J Parmar, research analyst at Angel Broking said, "There was no doubt about who is the winner in the Karnataka Elections. The assembly elections saw the return of the BJP as the single-largest party. In a way, the state of Karnataka maintained its 35 year old track record of voting out incumbent governments in each of the elections. But there may just about be a new twist to the Karnataka story. For Gowda, it would be a win-win situation as he would be able to officially pass on the baton to his son without compromising on his core vote bank. The Congress, even while accepting the anti-incumbency vote, will score a moral victory by keeping the BJP out of power in Karnataka. Of course, the final call will be on the governor after the final tally is out and the claimants are able to meet the governor of Karnataka. The situation becomes all the more interesting because the BJP with 30 seats more than the Congress had a lower vote share compared to the Congress. Quite obviously, the stock markets had sensed this kind of a possibility as the Nifty almost gave up most of its early morning euphoria. But the real outcome of the elections will only be visible in the next few days when the parties are able to hold their lot together and take a shot at the Karnataka Assembly."
Tata Steel (2.29%), PowerGrid (2.27%) and IndusInd Bank (1.54%) were the top Sensex gainers. Tata Motors (4.29%), Coal India (2.11%) and SBI (1.87%) were the top Sensex losers.
While midcap stocks index fell 0.81% or 131 points on BSE, small cap stocks index fell 0.65% or 114 points.
VK Sharma, head private client group and capital market strategy at HDFC Securities said, "While the Nifty closed just 5 points down at 10,802, the gloom was high as the BJP gave up its intraday majority mark with just 104 leads at the time of market close. The PSU bank index and the real estate index were the worst decliners. Though the BJP dramatically improved its performance from the last elections, reports that the Congress was ready to provide support to the JDS led the indices lower. It's an event that is now out of the way. The markets will now be more reactive to the international cues, which are a matter of concern specially the rising crude and dollar."
Market breadth was negative with 1025 stocks ending higher against 1615 stocks closing lower on BSE. 139 stocks were unchanged.
Earlier in the day, the Sensex rose over 400 points and Nifty hit 10,900 for the first time since February 2, 2018 amid the early trends of the results of Karnataka assembly elections showing BJP leading gains in the Congress-ruled state.
But as PM Narendra Modi-led party faltered ahead of the halfway mark, benchmark indices turned volatile and fell into negative territory. While the Sensex fell 451 points from the intra day high of 35,993, the Nifty was down 128 points from the intra day high of 10,929 level.
In early seconds of trade today, the Sensex rose 8 points or 0.02% to 35,565 and the Nifty fell 2.30 points to 10,804 signalling a flat opening for the market.
On Monday, the Sensex closed about 21 points higher after early gains were erased due to a sell-off by participants ahead of the outcome of Karnataka assembly elections. The broader 50-issue NSE Nifty edged up just 0.10 points to close at 10,806, after shuttling between 10,834 and 10,774.
Global shares were mixed on Tuesday amid continuing uncertainty over trade tensions between China and the US. Investors were watching for US retail sales data, due later in the day, for further clues on the health of the world's biggest economy.
France's CAC 40 inched up 0.2 percent to 5,548, while Britain's FTSE 100 rose by the same rate to 7,726. Germany's DAX gained only 0.1 percent to 12,991 after new data showed the country's economy slowed in the first quarter. US shares were set to drift slightly lower, with Dow futures down 0.4 percent and S&P 500 futures 0.3 percent lower.
Japan's benchmark Nikkei 225 edged down 0.2 percent to 22,818.02. Australia's S&P/ASX 200 lost 0.6 percent to 6,097.80. South Korea's Kospi slipped 0.7 percent to 2,458.54 while Hong Kong's Hang Seng dropped 1.2 percent to 31,152.03. The Shanghai Composite climbed 0.6 percent to 3,192.12.
Benchmark US crude oil gained 59 cents to $71.55 a barrel in electronic trading on the New York Mercantile Exchange. It rose 26 cents to $70.96 a barrel in New York on Monday. Brent crude, used to price international oil, gained 77 cents to $79.00 a barrel in London.