Power stocks plunge after mixed election results so far, REC loses about quarter of its market cap

Power stocks witnessed one of the most brutal sell-offs in years after the mid-morning trend showed the India Bloc alliance making significant leads in many states while the BJP-led NDA government appears to be fighting neck to neck in some of its strongholds.

REC lost nearly a quarter of its market cap with the stock down over 24.5% on Tuesday while PFC plunged 23%. Power Grid shares were down over 14% on Tuesday noon.

Adani Group shares also plunged with Adani Power shares declining over 17% on Tuesday. Tuesday’s market bloodbath didn’t spare even private power companies. Indian Energy Exchange shares lost nearly 10% while Reliance Power lost nearly 5%.

On Monday, with exit polls indicating the BJP-led NDA government expected to continue with a landslide victory, the PSU pack had witnessed a significant surge. Shares of PFC and REC had closed over 12% higher on Monday following the exuberance. However, Tuesday’s figures failing to replicate the exit poll predictions appears to have taken a huge toll on the market.

As early figures showed reasonable numbers for the INDIA Bloc, volatility increased in the market with the India VIX shooting nearly 41% to hit as high as 29.81 on Tuesday. This is the highest level seen since February 2022. India VIX is an index that reflects the anticipated volatility in the market over the next 30 days.

In recent weeks, the index has been topping the levels of 24 as multiple sound bytes about election outcomes emanating from different corners appeared to be unsettling the markets. On Monday, the index had crashed nearly 19% as exit polls had predicted a landslide victory for the BJP-led NDA government.

Meanwhile, the benchmark Nifty 50 and the Sensex were trading nearly 6% lower on Tuesday. The Bank Nifty index plunged over 8% during the day.