Analysts assess historical stock market reactions to Lok Sabha election outcomes, anticipating implications for the 2024 results. The stock market has historically demonstrated sensitivity to political events, with election outcomes influencing market behavior, particularly in response to pro-business and stable government victories.
Vinod Nair, head of research at Geojit Financial Services, notes the optimistic market sentiment following exit polls favoring a BJP-led victory. Nair highlights a surge in public sector undertakings (PSUs) and anticipates further market re-rating amid expectations of continued reform momentum.
Neeraj Sharma, AVP of technical and derivatives research at Asit C. Mehta Investment Intermediates, observes bullish market activity on Dalal Street, with record-high openings for the Sensex and Nifty. Sharma attributes this to broad-based buying, particularly in sectors like capital goods, PSU banks, oil and gas, power, and real estate, which saw gains of 5-7%.
To contextualize the market’s response, analysts analyze the market reactions on the result days of the past four Lok Sabha elections, starting from 2019:
2019 Lok Sabha Election Recap:
- Date: May 23, 2019
- Market Reaction: Positive response to BJP’s decisive victory under Narendra Modi’s leadership. Sensex surged over 1,000 points (around 3.5%), with Nifty also witnessing substantial gains.
- Reason: Investors welcomed the continuity of a stable government and anticipated ongoing economic reforms to stimulate growth.
According to data compiled by Livemint, while both Sensex and Nifty remained flat overall in 2019, they experienced intraday fluctuations:
- Sensex Intraday High: 40,124.96
- Sensex Intraday Low: 38,651.61
- Nifty Intraday High: 12,041.15
- Nifty Intraday Low: 11,614.5
As India prepares for another pivotal election outcome, market participants closely monitor political developments, anticipating their implications on investment sentiment and market dynamics.