India Election: Prime Minister Narendra Modi appeared poised on Tuesday to secure a third term in office, leading a ruling coalition, despite his Bharatiya Janata Party (BJP) losing its outright majority for the first time in a decade. This unexpected turn of events defied predictions of another landslide victory, unsettling investors and causing significant market fluctuations.
As India election results emerged, it became clear that Modi would now rely on the support of at least three regional parties, known for their shifting political loyalties. This new coalition scenario could introduce uncertainty into the policymaking landscape of the world’s most populous democracy, marking a departure from the strong, centralized leadership that Modi has maintained since 2014.
Modi’s BJP initially ended India’s era of unstable coalition governments by securing a majority on its own in both the 2014 and 2019 elections. In his first remarks since the vote counting began, Modi emphasized the historic nature of the BJP-led coalition’s third consecutive victory. “The blessings of the people for the third time after 10 years boosts our morale, gives new strength,” he told jubilant party members at BJP headquarters in New Delhi.
Despite the united front presented by opposition parties, Modi noted that they “could not even win as many seats as BJP won.” He promised to focus on key sectors such as electronics, semiconductors, defense manufacturing, renewables, and agriculture in his third term, although he did not provide specific details on his plans.
The election outcome triggered a sharp reaction from the financial markets. Both the NIFTY 50 and the S&P BSE Sensex plunged about 6%, marking their steepest decline on an election result day since 2004, when a BJP-led coalition was last ousted. Foreign institutional investors sold a record 124.36 billion rupees ($1.5 billion) worth of shares, and the rupee fell sharply against the dollar, with benchmark bond yields also rising.
This market turmoil followed a surge on Monday after exit polls predicted a substantial victory for Modi and the BJP, with the National Democratic Alliance (NDA) expected to secure a two-thirds majority. However, as of 1615 GMT on Tuesday, TV channels reported the NDA was leading in about 290 of the 543 seats in the lower house of parliament, with 272 needed for a majority.
The BJP accounted for approximately 240 of these leading seats, down from the 303 it secured in 2019. Full election results are anticipated later on Tuesday evening.
