Modi Set To Lose India Majority, Needs Allies To Keep Power

Indian Prime Minister Narendra Modi is set to lose his parliamentary majority for the first time in his decade-long tenure.

What Happened: Modi’s Bharatiya Janata Party (BJP) and its allies have secured enough seats to form a government. They are still short of the 272-seat majority. This outcome has led to speculation that Modi will need to form a coalition government, a first for him, according to Bloomberg.

Modi, however, remains resolute, vowing to continue as prime minister. He took to social media to declare his coalition’s victory, terming it a “historical feat.”

"Today is auspicious," Modi told supporters on Tuesday night at his party's headquarters. "It is confirmed that NDA has won a mandate to form the government for a third straight term. We are very, very grateful to the people who have reposed full faith in the BJP and NDA."

After the election, India’s stock market experienced its worst day in over four years. The markets had initially reached a record high following exit polls that suggested a comfortable victory for Modi, Bloomberg reports.

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Modi now faces the challenge of securing the support of two key members of his National Democratic Alliance, who control around 30 seats. The future of these allies, who only recently joined forces with Modi, remains uncertain.

Despite uncertainties surrounding their allegiance due to past history, a spokesperson for one ally, the Telugu Desam Party in Andhra Pradesh, affirmed support for Modi’s coalition, while over 20 opposition parties, led by Rahul Gandhi, aim to counter Modi’s electoral dominance.

Why It Matters: The unexpected election results have sent shockwaves through India’s political and economic landscape. The stock market, in particular, has reacted strongly to the news. The Nifty 50 index, comprising the 50 largest Indian companies by market capitalization, recorded its most significant daily drop since March 2020.

Despite the uncertainty, India’s growth trajectory is expected to remain positive. Business leaders and economists express confidence in the nation’s potential as a key contributor to global growth.

Investors seeking exposure to India can consider investing through ETFs. They include such as iShares MSCI India ETF INDA, WisdomTree India Earnings Fund EPI, or VanEck Vectors India Growth Leaders ETF GLIN.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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