Indian stocks fell sharply after Prime Minister Narendra Modi's party failed to win enough seats to form a government of its own.
Modi will have to rely on support from his allies in the National Democratic Alliance (NDA), the BBC reported.
The benchmark NSE Nifty 50 stock index closed down nearly 6%, its steepest decline since India's first Covid lockdown in March 2020.
Early results suggest that Modi's Bharatiya Janata Party (BJP) may have to rely on allies and form a coalition government.
This could lead to uncertainty regarding economic policies, some analysts believe.
The NSE Nifty 50 index, which includes stocks of various major companies, was at one point down 8.5% but ended the day down 5.9% at 21,884.5 points.
The S&P BSE Sensex also fell sharply, ending down 5.7% at 72,079.05.
The rupee (India's national currency) fell 0.5% against the US dollar, its biggest drop in 16 months.
More than half of the votes in India's parliamentary elections have been counted, and the BJP seems unlikely to secure a majority in the 543-member lower house of parliament.
Analysts suggest that this could lead to some uncertainty regarding economic policies, such as investment promotion, which has been one of the mainstays of the Modi government's governance.
"The key question is whether the BJD can maintain a one-party majority," said Ken Peng, head of Asia investment strategy at Citi Global Wealth.
"If not, then will the coalition be able to provide economic development, especially infrastructure?" Peng added.
Puneet Sharma, chief executive and fund manager at Whitespace Alpha, argued that if the new government was dependent on its coalition partners, it "could shift its focus" and put more emphasis on social welfare "instead of concentrating on reforms during the July budget".
The Hindu nationalist BJP won a majority in 2014 and 2019.
Markets rallied on June 3 after weekend exit polls suggested Modi and his party would win a landslide victory.
But now it seems that BDZ will not be able to achieve a majority on its own.
Market analyst Fiona Cincotta said the key indices of Indian stocks were "really broken".
She added that there were some "very big falls" in individual stocks, including oil and gas company Reliance Industries and Bank of India. | BGNES
