ETFs
How Indian Election Results Affect These Indian ADRs and ETFs
Key takeaways
- The results of the Indian elections taking place on Tuesday have had immediate impacts on a number of investments linked to the country’s economy.
- Prime Minister Narendra Modi appears ready to run for a third term at the head of the country, but his party unexpectedly lost its majority and will have to rely on its coalition partners to form the government.
- Indian companies’ American depositary receipts (ADRs) and India-focused exchange-traded funds (ETFs) trading in the United States fell as election results trickled in.
The Indian election results, announced on Tuesday, had an immediate effect on the domestic stock market, as well as the value of investments in Indian companies and businesses. exchange-traded funds (ETFs) in the USA
As vote counting continues, Indian Prime Minister Narendra Modi has claimed victory for what would be his third consecutive term as leader of the country. However, Modi’s party, the Bharatiya Janata Party (BJP), unexpectedly lost its majority and will now have to rely on the support of coalition partners to form the next government. And investors hesitated in the face of the less brilliant than expected performance of the BJP.
ADRs of some of India’s biggest banks and companies fall
India’s stock market suffered Tuesday morning as election results began to reveal worse-than-expected performance for Modi’s allies. Markets were down nearly 6% at the end of trading, erasing much of the gains from earlier this year, The New York Times reported.
This also meant American Depository Receipts (ADRs) of a number of Indian companies trading on US exchanges immediately felt the blow from the Indian election results, with ADRs from banks like ICICI Bank (IBN) and HDFC bank (BHD) each falling more than 9% Tuesday afternoon in US trading.
Some other large Indian companies that trade on US exchanges, such as Dr. Reddy’s Laboratories (RDY) and Infosys (INFERT) were down just under 1%, while Wipro shares (SPIRIT) were down about 1.7%.
Several of India’s largest ETFs also fall
While Indian markets suffered on Tuesday, a number of India-focused ETFs followed suit, led by some of the biggest, with billions in assets under management (AUM).
The iShares MSCI India ETF (INDIA), one of the largest with just over $10.6 billion in assets under management, was down about 6% at $51.46 around 2:15 p.m. ET Tuesday.
Several others, including the Invesco India ETF (PIN), iShares MSCI India Small-Cap ETF (SMIN) and the Franklin FTSE India ETF (FLIN), each fell more than 6%, while the WisdomTree India Earnings Fund (EPI) fell by almost 8%.