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Key Takeaways
- India’s election results that are developing Tuesday have had immediate impacts on a number of investments related to the country’s economy.
- Prime Minister Narendra Modi looks poised for a third term leading the country, but his party unexpectedly lost its majority and will need to rely on coalition partners to form the government.
- American depository receipts (ADRs) of Indian companies and India-focused exchange=traded funds (ETFs) trading in the U.S. fell as election results trickled in.
India’s election results, coming in on Tuesday, had an immediate effect on the nation’s stock market, as well as the value of investments in Indian companies and exchange-traded funds (ETFs) in the U.S.
While vote-counting continues, Indian Prime Minister Narendra Modi has claimed victory for what would be his third consecutive term leading the country. However, Modi’s party, the Bharatiya Janata Party (BJP), unexpectedly lost its majority and now will have to rely on support from coalition partners to form the next government. And investors balked at BJP’s less-stellar-than-expected showing.
ADRs of Some of India’s Largest Banks, Companies Drop
India’s stock market suffered early Tuesday as election results started to disclose worse-than-expected performance for Modi’s allies. Markets were down nearly 6% by the end of trading, erasing much of this year’s early gains, The New York Times reported.
That also meant American depositary receipts (ADRs) of a number of Indian companies trading on U.S. exchanges felt the blow of India’s election results immediately, with ADRs of banks like ICICI Bank (IBN) and HDFC Bank (HDB) each falling more than 9% Tuesday afternoon in U.S. trading.
Some other big Indian companies that trade on U.S. exchanges like Dr. Reddy’s Laboratories (RDY) and Infosys (INFY) were down a little under 1%, while Wipro shares (WIT) were off roughly 1.7%.
Several of the Largest Indian ETFs Also Falling
As India’s markets suffered Tuesday, a number of India-focused ETFs followed suit, led by some of the largest, with billions in assets under management (AUM).
The iShares MSCI India ETF (INDA), one of the largest with just over $10.6 billion in AUM, was down about 6% at $51.46 by about 2:15 p.m. ET Tuesday.
Several others, including the Invesco India ETF (PIN), iShares MSCI India Small-Cap ETF (SMIN), and Franklin FTSE India ETF (FLIN), each fell more than 6%, while the WisdomTree India Earnings Fund (EPI) tumbled almost 8%.