Defence sector dip: stocks plummet 11% amidst tight election race uncertainty

Amidst the backdrop of a closely contested election race, the defence sector witnessed a notable setback with stocks plunging by 11% on the Bombay Stock Exchange (BSE). Bharat Electronics Ltd (BEL) and Hindustan Aeronautics (HAL) was seen to be sold by the major players after the initial counting trends, hinting at potential challenges for the ruling National Democratic Alliance (NDA).

The shares of BEL bore the brunt of the market turmoil, experiencing a steep decline of over 19%, while HAL saw a significant drop of over 14%. Bharat Dynamics and Cochin Shipyard also faced losses, with their shares declining by 10% and nearly 9%, respectively.

Analysts attribute this sharp downturn to the lucrative behaviour, as investors, who had seen substantial gains in defence stocks over the past year, seized the opportunity to cash in amidst election uncertainty.

The defence sector mirrors broader market sentiments, as PSU bank stocks also witnessed a sharp plunge of over 10% on June 4, reflecting the prevailing uncertainty surrounding the election outcome. Early numbers, diverging from the optimism of exit polls, prompted investors to reevaluate their positions, leading to widespread selling across sectors.

As the results of the Lok Sabha election 2024 unfolds and the markets turn up volatile, investors continue to stay on edge, closely monitoring developments that could shape the economic and political aspects in the coming days.