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Economy

Low voter turnout sparks fears among investors

The fear looms that a weakened performance by the BJP could disrupt the continuity of economic reforms and policy initiatives, unsettling the markets. Speculation regarding the electoral ramifications of low voter turnout has been a driving force behind market sentiments, as initial reports indicate a decline compared to previous elections.

- Mumbai - UPDATED: May 8, 2024, 01:42 PM - 2 min read


India's 2024 Lok Sabha elections have sparked not just political fervor but also sent ripples through the stock market, as reports of low voter turnout has spread a wave of uncertainty.

 

With India VIX, Sensex, and Nifty caught in a bearish whirlwind, investors are left questioning the implications for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) and the National Democratic Alliance (NDA).

 

Reports of tepid voter turnout in the early phases of voting have sparked concerns about a potential erosion of the NDA's ruling mandate.

 

The India VIX, dubbed the "fear gauge" for the stock market, has set on its longest streak of increases since March 2020, setting off alarm bells among investors.

 

With nine consecutive sessions of growth, the index has rebounded from a recent record low, edging closer to its highest close since early 2023.

 

Such surges in the VIX typically signal investor apprehension and a short-term bearish outlook.

 

The benchmark indices of the Indian stock market have also painted a grim picture, with the 30-share Sensex shedding over 1,000 points in just three trading days, and the broader Nifty 50 index teetering towards its lowest close since the elections commenced on April 19.

 

The combined market capitalization of all BSE-listed stocks has witnessed a staggering decline of Rs 11 lakh crore, mirroring the unease surrounding the electoral uncertainties exacerbated by lackluster voter turnout.

 

The fear looms that a weakened performance by the BJP could disrupt the continuity of economic reforms and policy initiatives, unsettling the markets.

 

Speculation regarding the electoral ramifications of low voter turnout has been a driving force behind market sentiments, as initial reports indicate a decline compared to previous elections.

 

The turnout for the first two phases of the 2024 Lok Sabha elections fell short of the figures recorded in 2019, triggering apprehensions of a less emphatic BJP performance.

 

However, amidst the gloom, there exists hope as well.

 

SBI Research has countered prevailing narratives, highlighting that while the turnout percentage may have dipped, the absolute number of voters has increased, suggesting a more nuanced interpretation.

 

Moreover, factors beyond voter turnout, such as global economic dynamics and quarterly earnings reports, have also influenced market trends.

 

So, while low voter turnout might be making headlines, there's more going on behind the scenes.

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