On Tuesday, the stock markets, which had surged earlier in the day when it seemed the BJP was well on its way to victory in Karnataka, closed lower as it became clear that the party was likely to fall short of the 113 seats required to form the next government in the state. The BSE Sensex finished 12.77 points down at 35,543.94 points while the National Stock Exchange Nifty declined 4.75 points to close at 10,801.85 points.

The BJP outperformed exit poll predictions to almost reach the half-way mark. At 4.05 pm, the party had won 78 seats and was leading in 26, according to the Election Commission of India. The Congress had won in 47 constituencies and was leading in 31. The Janata Dal (Secular), believed to be the kingmaker in the formation of the new government, had won 23 seats and was leading in 14.

Tata Steel, Power Grid Corporation, Tata Consultancy Services, Asian Paints and HDFC Bank were the biggest gainers on the Sensex. The top losers were Tata Motors, Coal India, State Bank of India, Sun Pharmaceuticals and ITC.

The stocks that gained the most on the Nifty were Tata Steel, Power Grid Corporation, Bajaj Finance, Tata Consultancy Services and Asian Paints. The biggest losers were Tata Motors, Coal India, State Bank of India, GAIL and Indiabulls Housing Finance.

The rupee declined sharply, trading 41 points down against the United States dollar at 67.92 at 4.10 pm.

All other major Asian markets, except the Shanghai SE Composite Index, declined sharply. The Hong Kong index fell nearly 390 points, the Taiwan index 77 points, Japan’s Nikkei 225 over 47 points, and the Australia ASX All Ordinaries 36 points.