Delhi election results will be declared tomorrow but the Indian stock market fell today, indicating that companies are apprehensive that the Bharatiya Janata Party might lose, as exit polls showed yesterday. Global worries and disappointing corporate news added to the bearish sentiment.
The benchmark S&P Sensex declined 1.5 percent today after six out of seven exit polls said that the BJP might lose in Delhi. The rupee slid to 62.18 per dollar, a fall of 0.8 percent, while the yield on government bonds climbed two basis points to 7.72 percent. This the seventh consecutive day of losses for the Sensex, something that had last happened in November 2013.
Worldwide developments have also added to investors' worries. Chinese imports are down, signalling a slowing economy, and traders are speculating that the U.S. Federal Reserve might raise rates, which would constrict dollar supply.
Modi has said before that winning more state elections is necessary the majority of opposition parties in the upper house of parliament, to make sure important reform legislation is passed. A defeat in Delhi would halt the winning spree of the BJP. Since coming to power in May last year, the party has won in three out of four states.
One of AAP's promises is to lower electricity tariff. That is not good news for providers, and power stocks declined. Tata Power Co. fell 3.2 percent, and Reliance Infrastructure was down 2.8 percent.
Results also disappointed, with Gail India Ltd., India's largest natural gas supplier, reporting a 64 percent drop in third-quarter profit. The stock slumped the lowest in two months. Tata Steel stock fell 2.2 percent, to its lowest in almost a year after reporting sales that were below analyst estimates. Tata's other major company, Tata Motors, also fell 1.7 percent after reports that its Jaguar Land Rover unit in North America will recall 104,000 cars after authorities flagged issues that could lead to problems with brakes and lights.
The government will report GDP figures later today under a new system of accounting, which has resulted in previous years' estimates getting jacked up. By that yardstick, the new GDP figures are expected to be robust, but doubts have risen both about the new methodology and quality of data. Arvind Subramanian, the government's chief economic advisor, has said the changes are mystifying and that he is puzzled by the new growth figures.