Exit polls predicted a landslide win, but the ballot boxes held a surprise twist. Indian Prime Minister Narendra Modi, initially expected to secure a clear victory, failed to achieve an outright majority for the first time since his rise to power in 2014. Although he won his third consecutive term, Modi needed coalition support to form a government — causing ripples across political and financial sectors.

• Modi’s Bharatiya Janata Party (BJP) secured around 240 seats out of 543, down from 303 in 2019 — while the opposition Congress party nearly doubled its seat count.
• Political analysts attribute the setback to high unemployment and inflation, which likely influenced voters despite Modi’s appeals to Hindu nationalism.

Victory’s costly aftermath: Following the election results, India’s stock markets plunged due to political uncertainties, erasing gains from a record high just a day earlier buoyed by favorable exit polls for Modi. The NSE Nifty 50 index fell nearly 6%, marking one of its worst performances in over four years and wiping out $390B in market value. While markets modestly recovered on Tuesday, the Indian rupee depreciated by ~0.5% against the dollar as a consequence of the BJP’s unexpectedly poor performance.