Monday, June 24, 2024
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How Well Do Markets Play Post Elections?

General elections are being held in India from 19 April to 1 June 2024 in seven phases, to elect all 543 members of the Lok Sabha. The votes will be counted and the results will be declared on 4 June 2024. The market participants are awaiting the results of the election. So these results will be shaping the direction of Indian markets for H2 2024.

How Have Markets Performed Post Election In Previous Times?

Taking a look at the recent five general elections, our benchmark indices have traded higher six months after the results of the elections have been announced.

When it comes to NIFTY 50, the benchmark index has given returns of more than 10% after six months from the conclusion of the 1999 elections. The index was also up by 8.22%, 32.95%, 16.10%, and 2.44% six months from the conclusion of 2004,2009,2014 and 2019 general elections in our country.

When it comes to Sensex, the benchmark index has given returns of 7.5% after six months from the conclusion of the 1999 elections. The index was similarly up by 9.82%, 35%, 15.7%, and 4.25% after six months from the conclusion of the next four elections respectively.

What Are The Streets Expecting This Time?

Markets prefer the same government in Indian general elections due to the stability it brings to economic policies. Continuity with the current government ensures consistency in policy frameworks, providing clarity for investors and businesses. This stability also boosts investor confidence, as it reduces the uncertainty surrounding potential policy changes that could occur under a new administration. 

The long-term infrastructure projects and economic development initiatives benefit from uninterrupted governance, as it ensures the continuity of funding and implementation. Additionally, a stable government is often associated with better fiscal discipline, which is crucial for maintaining market stability and investor trust. Therefore, continuity with the current government offers a conducive environment for sustained economic growth and market stability.

Conclusion: The volatility in the market is increasing as the result date is approaching nearer, The Volatility Index is at 24.4 levels today and is up by 13.5% today so one should work with a proper strategy and risk management because the market can go either ways after the results of the elections.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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