Indian Prime Minister Narendra Modi’s political party has lost outright majority for the first time in a decade, but looks set to retain power as part of a ruling a coalition.

In a stunning blow to the political leader once courted by Donald Trump, voters defied predictions of another landslide for Modi’s Bharatiya Janata Party (BJP).

But Modi looks set to head a ruling coalition of parties.

The outcome unnerved investors. Stocks fell steeply as emerging results showed that Modi would, for the first time since sweeping to power in 2014, depend on at least three disparate regional parties whose political loyalties have wavered over the years.

This, analysts say, could introduce some uncertainty into policymaking in the world’s most populous democracy after a decade in which Modi has ruled with a strong hand.

Modi’s BJP won a majority on its own in 2014, ending India’s era of unstable coalition governments, and repeated the feat in 2019.

Modi said people had placed their faith in the BJP-led coalition for a third time and it was historic, in his first comments since counting of votes began.

“The blessings of the people for the third time after 10 years boosts our morale, gives new strength,” he told cheering BJP members at party headquarters in Delhi.

“Our opponents, despite being united, could not even win as many seats as BJP won.”

Promising to work harder and take “big decisions,” Modi listed electronics, semiconductors and defence manufacturing, renewables and the farm sectors as areas of special focus in his third term.

The blue-chip NIFTY 50 and the S&P BSE Sensex each tumbled about 6 per cent, their steepest decline on an election outcome day since 2004, when a BJP-led coalition lost power.

TV channels on Tuesday showed the NDA was ahead in about 290 of the 543 elective seats in the lower house of parliament, where 272 is an overall majority, with counting nearing its end.

Full results were likely later on Tuesday night.

They showed BJP accounted for about 240 of the seats in which the NDA was leading, compared with the 303 it won in 2019.

Two key regional allies in the NDA endorsed Modi as the next prime minister, rejecting local media speculation that they could be wavering in their support or possibly switch sides.

The Telugu Desam Party (TDP) and Janata Dal (United) said their pre-poll alliance with BJP was intact and they would form the next government.

The BJP’s numbers were likely pulled down by the party’s poor showing in the country’s most populous state, Uttar Pradesh, which also sends 80 MPs to parliament.

The party was leading in 33 seats in the state, down from the 62 it won there in 2019, with analysts saying bread-and-butter issues had overshadowed the BJP’s appeal to the Hindu majority.

A grand temple to Hindu god-king Lord Ram that Modi inaugurated in January did not boost the BJP’s fortunes as it was expected to, they said.

The opposition INDIA alliance led by Rahul Gandhi’s centrist Congress party was leading in more than 230 seats, more than forecast.

Congress alone was leading in nearly 100 seats, almost double the 52 it won in 2019 – a surprise jump that is expected to boost Gandhi’s standing.

“The country has unanimously and clearly stated, we do not want Narendra Modi and Amit Shah to be involved in the running of this country, we do not like the way they have run this country,” Gandhi said, referring to Modi’s powerful No.2, Home Minister Shah.

“That is a huge message.”

Gandhi said Congress would hold talks with its allies on Wednesday and decide on a course of action, when asked if the opposition would try to form a government.