Is HPCL a government company
"Bloody Monday" on India's stock exchanges
The change of power in India is accompanied by dramatic price movements on the Indian stock exchanges. The uncertainty about the course of the new government had already led to a price decline of over 6% on Friday. A real stock market crash followed on Monday, which however receded somewhat towards the end of trading.
India has had a "Bloody Monday" behind it. The “Bombay Stock Exchange”, the country's most important stock exchange, experienced the deepest price drop in its 124-year history on Monday. Shortly after the opening of the markets, the price of the main Sensex index fell by over 10% to 4283 points. This triggered the electronic suspension of trading on all stock exchanges in the country. When trading resumed after two hours, prices fell again by just under 5%. It was not until the third opening that prices recovered as a result of massive interventions by state institutions before they began to decline again. At the end of trading, the price was 4505 points - the worst fall since 1992.
First panic sales on Friday
The share price had already fallen on Friday, which was interpreted as a reaction to the price drops on other Asian markets. The resulting nervousness was fueled by the growing uncertainty about the economic policy course of the new Indian government. The elections in India had produced a surprise winner in the form of the Congress Party. Representatives of the communist parties, which will be an important pillar of the victorious (but minority) congress alliance, had criticized the previous policy of privatization, namely the planned sale of large oil companies. The Congress Party had also declared in its election manifesto that it would not bring profitable companies to the market. This led to panic selling, especially on the part of foreign investors. They had become heavily involved in such companies in recent months after the government had launched several large blocks of shares on the market. Other state-owned companies such as the oil distributors BPCL and HPCL were about to go public and have therefore also been popular investment properties in recent months. The recently noticeable decline in foreign investment in “new markets” such as India had already led to significant sales before the change of government.
The dramatic collapse of the course on Monday aroused suspicions in the capital Delhi that manipulation was behind it and that political opponents wanted to take revenge because of the lost parliamentary election. Technically, the BJP government is still in office, and left-wing party officials have accused the Treasury Department of failing to ask state financial institutions to intervene in the market. It was then the former Finance Minister Manmohan Singh who dispelled this suspicion and used his prestige as the architect of economic reforms to calm the atmosphere. He said there was "no cause for panic at all". The new government will continue the good work of its predecessors and only make corrections where they are necessary. He promised the early adoption of a joint government program to allay fears and uncertainty. Such had not been considered beforehand, because nobody had expected a victory for the BJP opponents.
Investors hope for a quick inauguration
The "Left Front", which had never done so well in the parliamentary elections with 64 seats, may have facilitated Singh's efforts to stabilize the nervous stock markets. She decided on Monday not to join the coalition led by the Congress party, but to support it from outside. Sonia Gandhi now has the written commitment of a dozen parties with a total of 317 seats (with a parliamentary size of 543 seats), so that nothing should stand in the way of her assuming the office of Prime Minister. On Monday evening, she went to the seat of the President, who is entitled to the task of forming a government. In view of the great uncertainty in the financial markets that the change of power has brought with it, a rapid inauguration could now be forced and carried out on Wednesday. The outgoing ruling party BJP has decided to stay away from the ceremony in protest at Sonia Gandhi's foreign origin.
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