Impact of Election on Stock Market

Impact of Election on Stock Market
Impact of Election on Stock Market

by Tanushree Jaiswal Last Updated: Nov 21, 2023 - 04:34 pm 494 Views
Listen icon

The average return in the month prior to elections is 6%, while the average return in the year prior to elections is 29.1%.

  Before Results Election After Election Results 2yr Return
Loksabha Result 1 month 1 month 1 month 1 month  
06-10-1999 50.7 3.3 -0.8 -13.1 37.6
13-05-2004 98.1 -7.5 -14.4 23.3 121.5
17-05-2009 -24.9 26.8 6.8 31.9 7
16-05-2014 16.6 8 7.1 20.6 37.1
23-05-2019 5.2 -0.4 0.1 -2.8 2.4
Average 29.1 6 -0.2 12 41.1

Market Insight 

Impact of Volatility before and After Election

The election resulted in strong returns in financial markets as the economy stabilized and political unrest abated. Investors who stuck with these products frequently see returns during uncertain times.

Which sectors outperform and underperform in Elections?   

1. Pharma and the auto industry performed well after the election.
2. dependable performers: PSUs and Pvt Bank
3. IT and metals sectors underperform

Which Investing Strategies (Factors) do well in Elections?    

1. Alpha: Highest returns
2. Dividends & Volatility: consistently positive returns
3. Quality, Momentum, Value: Modest returns

What if I say that, Stock market is not dependent on elections?

Different governments implement various changes that lead to favourable results in their own eras while obstructing others.

Data Stats Presenting 

Who could win upcoming Indian Stock Market election?    

1. One of the biggest research house’s analysis of the 2024 elections projects that the existing administration will win by a commanding majority, which may result in a market gain of 0% to 5% in the next three months. 
2. According to another research analyst, there is a 10% chance that the BJP will lose in 2024, and he predicts a 25% market correction.
3. The worst case scenario is for the leading party to have fewer than 200 seats, which may cause a slump that lasts up to 40Q.

What is the Outlook for the Indian economy going forward?

1. Regardless of the party in power, India's economy will generally continue in its pro-growth trajectory.
2. It will emphasize things like infrastructure, productivity-boosting reforms, maintaining market-driven economic policies, and strengthening the economy's resistance to political changes.

Interesting fact:    

1. Since 1980 to 2023 the government has changed 11 times.
2. Since 1980, the average real GDP growth is 6.2%, and Sensex gave 15.5% CAGR returns.

The upcoming 2024 elections bring forth different projections, with one analysis suggesting a potential market gain of 0% to 5% if the existing administration secures a commanding majority. On the flip side, a 10% chance of the BJP losing in 2024 has been associated with a predicted 25% market correction. However, the worst-case scenario, a leading party with fewer than 200 seats, is foreseen to cause a slump lasting up to 40 quarters.


How do you rate this blog?


Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage


About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
Open Free Demat Account
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Weekly Outlook on Copper - 01 December 2023

Copper prices saw a modest 0.33% gain, reaching 722 on Thursday, as worries about a slowdown in Chinese manufacturing loomed large. The November's NBS Manufacturing PMI slipped to 49.4, the second consecutive monthly decline, heightened concerns, emphasizing the need for additional government support to fortify China's economic growth. The NBS Non-Manufacturing PMI at 50.2, reflecting the 11th month of service sector expansion, hinted at a softer pace.

Swing Trading Stocks: Week of 04 December 2023

Swing Trading Stocks for the Week

Weekly Market Outlook for 04 December to 08 December

Our markets started the truncated week on a positive note and it rallied higher throughout the week. The first day of the December month infact witnessed a new record as the Nifty surpassed its previous high and ended in uncharted territory above 20250 with weekly gains of almost two and a half percent.