BENGALURU, June 4 (Reuters) - Indian shares fell sharply Tuesday as early vote-counting trends showed Prime Minister Narendra Modi's Bharatiya Janata Party-led alliance was likely to win a majority, but the extent of the victory was not clear as its lead was narrower than predicted.
The NSE Nifty 50 index was down 3% at 22,566 points as of 10:50 a.m IST, and the S&P BSE Sensex fell 3% to 74,154.
The indexes fell as much as 3.7% earlier in the session, erasing all of Monday's gains after exit polls projected that the BJP-led alliance will likely get a two-thirds majority in the lower house.
TV channels showed the ruling National Democratic Alliance was ahead in more than 300 seats. 272 seats is the minimum needed for a simple majority in the 543-member lower house of parliament.
"The leads for the NDA is much lower than what the market could be comfortable with. It's very early and markets will remain will volatile depending on how the numbers change every minute," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
All sectors were in the red. Bank stocks fell 4.2%, infrastructure declined 5%, while oil and gas stocks lost 5.9% and state-run companies and banks retreated 8.5% and 8.9%.
Adani Enterprises and Adani Ports were top losers in Nifty 50 index, falling 12% and 10%, respectively. Other Adani group stocks were down between 6-12%. The group stocks had jumped between 4%-18% on Monday after the exit polls.
The volatility index jumped to its highest since June 2022 at 26.32, after easing on Monday.
"Despite exit polls giving a resounding victory for the ruling party, markets volatility gauge did not go down below 20, as it was pricing in an outlier," said Anand James, chief market strategist at Geojit Financial.
"We also saw short covering and addition of long positions by foreign investors, which may have come under pressure because of the surprise in the vote share count," James added.
Reporting by Sethuraman NR in Bengaluru; Editing by Varun H K
Source: Reuters