India's 2019 election is only one of the market's many worries

• India's benchmark stock indices Sensex and Nifty have been volatile in early trade.
• High-stakes election that has kicked off today has kept a lid on market bets.
• The country's stock traders are mostly positioned for another win for Narendra Modi-led BJP.

Markets around the world have been a bit shaken by the American central bank's cautious view of the world's largest economy. Global investors fear that any turbulence in the US could rattle the entire world.

The market confidence in India, the world's fastest-growing economy, is further capped by the Parliamentary elections that have kicked off today (April 11). Benchmark indices, Sensex and Nifty, see-sawed in early trade, rising above only to slide below the closing count a day before. Meanwhile, 142 million voters in 20 states and union territories are expected to vote in the first phase of voting for the seventeenth general election in the country.

Stocks in the auto, financial services, and fast-moving consumer goods space were in the green, but only slightly, while all other sectoral indices slid lower on the National Stock Exchange.

Reports of fresh capital infusion by the government into state-owned banks did not boost the sentiment. Even the robust bidding for luxury cars owned by fugitive diamantaire Nirav Modi did not help the shares of Punjab National Bank, one of the victims of the loan frauds by Modi's company.

One of the biggest worries in the minds of the domestic investors is the money that is stuck with the mutual funds. Kotak Mahindra Asset Management Company has reportedly written to those who invested in one of its fixed maturity plans that it will not be able to pay the entire redemption amount now.

Small investors who are risk averse pick fixed maturity plans. The money pooled is lent to companies with the assurance that people can take investments back after a fixed amount of time and definite returns. Of course, the market risks associated with mutual funds remain. In this case, because the borrower has sought more time to repay the loans, the mutual fund has sought more time from its investors before the fund can be redeemed.

The case of Kotak Mahindra AMC is one of the many mutual funds who are left only with prayers to recover the billions of investment in beleaguered companies like Infrastructure Finance and Leasing Services (IL&FS), Essel Group, and Dewan Housing Finance among others. The risks that have emerged from the unraveling crisis in India's shadow banking sector has shaken market confidence.

Indian equities fell sharply on Wednesday too, after the International Monetary Fund (IMF) revised down the global growth forecast fuelling fears of a global slowdown. Caution was also seen among investors ahead of the start of earning season and for fresh trade tensions between the US and the European Union.

SEE ALSO:
142 million voters go to polls today in 20 states— here’s a look at the key issues in every state

Democracy’s appeal is under test in the shadow of the world’s highest battleground

This state going to polls today is the picture of India's rising inequality