(L to R) BSE building and Congress leader Rahul Gandhi.
Credit: Reuters, PTI Photos
The sudden rise and drop in BSE Sensex and NSE Nifty on June 3 and June 4 has opened doors for a new political battle with politicians in I.N.D.I.A. bloc including Rahul Gandhi alleging that Narendra Modi and Amit Shah tried to manipulate the investors by asking them to invest during the Lok Sabha election rallies.
As exit polls on June 3 predicted a return of Modi government at the Centre for third term, markets recorded an overall gain of more than Rs 11 lakh crore in investors' wealth as the BSE Sensex and Nifty zoomed more than 3 per cent which was the highest single-day gain in 3 years while closing at life time highs.
"Exit poll has activated the optimism of a memorable win for the ongoing government. Strong economic data like GDP growth, 100-days measures list and final budget will be the key points market will observe in the coming weeks," Vinod Nair, Head of Research, Geojit Financial Services had said.
However, as the counting of votes commenced on June 4, the stocks witnessed a bloodbath unlike in the last four years since the Covid outbreak. Sensex fell by a massive margin of 4,389.73 points on the results noon while Nifty saw a drop by 1,379.40 points. It led to a total loss of over Rs 32 lakh crore ($386 billion) in investor wealth.
Exit polls predicted the BJP would comfortably win a majority, winning over 272 seats in the 543 member parliament, while overall with its alliance partners, the figure would touch 360-370. Interestingly, on the results day, the Election Commission announced that the BJP won 240 seats while the Congress won 99.
Oppositions' charges against Modi government
While much of the losses have been recovered in the next two sessions, Congress leader Rahul Gandhi addressed a press conference earlier this week where he demanded a Joint Parliamentary Committee (JPC) probe into the rise and fall in stock market numbers.
Gandhi said that after the "fake" exit polls, stock markets rose, and then crashed on June 4 and called it the "biggest stock market scam". The NSE Nifty tumbled 1,982.45 points or 8.52 per cent to 21,281.45 during the day on June 4. Later, it ended at 21,884.50, a sharp decline of 1,379.40 points or 5.93 per cent. Sensex and Nifty had previously declined by around 13 per cent on March 23, 2020 when lockdown was imposed due to the Covid-19.
“I am saying people very high-up have carried out this scam,” Gandhi alleged that foreign investors bought stocks at high rates while Indian investors sold and booked profits. “The media releases fake exit polls, BJP's internal survey showed them 220 seats, BJP leaders had this info. Intelligence agencies had said they will get 200-220 seats. Stock market breaks all records on June 3, and on June 4, stock market crashes,” he charged.
Gandhi also referred to Modi and Shah's speeches where the BJP's duo asked investors to invest, and said “This is the first time the Prime Minister has commented very interestingly and multiple times, one after the other, saying that the stock market is going to boom. At the same time, he has information that the exit polls are wrong."
The Congress leader asked, "Is it their job to give investment advice? Second, why were interviews given to the same media house, owned by the same business group, which is also under SEBI investigation for manipulating the stock market? Third, what is the connection between the BJP, the fake exit pollsters and the dubious foreign investors?”
Referring to the exit polls, excerpts of a letter written by TMC's Saket Gokhale to SEBI were quoted by News18 as saying: "The investigation must also determine whether the BJP & any poll agencies have made crores by manipulating the stock markets through exit polls.”
Modi govt responds to the Whys of Opposition
Senior BJP leader Piyush Goyal spoke in defense of Modi government. NDTV quoted excerpts of Goyal's press address on June 6 where the BJP man said: "When the results came on June 4, when the market fell, foreign investors sold at a low price and Indian investors bought it with the belief that the Modi government was coming and we would take advantage of it. So foreigners bought at a high price and sold at a low price. Indian investors sold at a high price and bought at a low price. So in a way, Indian investors earned even in this period. No one suffered a loss."
"Rahul Gandhi has still not overcome the loss in the Lok Sabha Elections. Now, he is conspiring to mislead the market investors. Today, India has become the fifth-largest economy," said Goyal while adding that "We all know equity markets react to various estimates and predictions during any elections, or for that matter any forecasts by banks and institutions. Ups and downs are normal even during a non-event."
Meanwhile, on June 7, the RBI decided to keep the policy rate unchanged for the eighth time in a row, saying it will maintain a tight vigil on inflation resulting which the benchmark equity indices recorded a jump on the same day.
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