Investing.com – Indian stocks and indexes posted a choppy opening on Wednesday after 2024 general election results showed the ruling BJP-led alliance secured a much smaller majority than initially expected.

Both indexes fell almost 6% on Tuesday after preliminary results showed the rival Indian National Congress and its allies winning far more seats in India’s lower house than expected, while the BJP lost ground.

By 10:10 a.m. EST (04:40 GMT), the Nifty was up 0.7% after falling as much as 2% at the opening. Sensex fell slightly.

The Nifty and Sensex indices touched record highs on Monday after exit polls conducted over the weekend showed a decisive victory for the BJP. However, they were hit by profit-taking and the withdrawal of industrial shares after Tuesday’s results.

While Prime Minister Narendra Modi is still expected to gain a uncommon third term, the smaller majority heralds greater difficulties in implementing economic reforms.

This led to a piercing sell-off in industrial and manufacturing stocks that were expected to benefit from a mighty third term in office for Modi, whose policies over the last decade of rule have been largely based on infrastructure spending and strengthening Indian manufacturing.

Conglomerate Adani company Ltd (NS:), which is largely aligned with the ruling party, fell 4% on Wednesday, extending its almost 20% loss from the previous session. Its sister company Adani Ports and Special Economic Zone Ltd (NS:) also lost almost 4% after a similar decline on Tuesday.

Larsen and Toubro Ltd (NS:), which benefited from increased infrastructure spending in the country, fell 6% after losing almost 13% in the previous session.

But losses in other heavyweights such as Reliance industry Ltd (NS:), currently appears to be falling after piercing declines on Tuesday.

“There are two immediate political risks that need to be monitored: 1) NDA coalition partners defecting to break away from the BJP and 2) challenges from the NDA to Modi as government leader. Either outcome would be unfavorable for financial markets,” ANZ analysts wrote in a note.

However, they maintained their economic outlook for the Indian economy, forecasting an outsized gross domestic product of 6.8% for the current financial year.