As exit polls forecast a commanding victory for the Bharatiya Janata Party (BJP) in the recently concluded Lok Sabha elections, market experts anticipate a bullish rally beginning this Monday.
Analysts assert that the exit polls have alleviated election-related apprehensions that had been unsettling the markets over the past month.
The seven phases of voting, culminating on Saturday, were accompanied by noticeable market volatility.
Reflecting on trends from the past five general elections, the Sensex, India’s benchmark stock index, experienced mixed performance on counting day.
Three times, we observed negative returns:
- 0.24 percent in 1999
- 11.10 percent in 2004
- 0.76 percent in 2019
Conversely, positive returns were recorded twice, notably in 2009 and 2014, with figures standing at 17.70 percent and 0.90 percent respectively.
Post-election, the Sensex demonstrated favorable trends.
Positive Returns Noted After Announcement Of Results
One month after the results were announced, the returns were noted positively in:
- In 2009 – 22.20 percent
- In 2014 – 4.59 percent
- In 2019 – 0.99 percent
However, 1999 and 2004 saw negative returns of 2.11 percent and 10.50 percent respectively during the same timeframe.
Over the subsequent six months following general election outcomes, the market consistently yielded positive returns.
Noteworthy figures include 7.56 percent (1999), 9.82 percent (2004), 35.05 percent (2009), 15.71 percent (2014), and 4.27 percent (2019).
Impact Of Election Results On India’s Equity Market
Tanvi Kanchan, Head-UAE Business and Strategy at Anand Rathi Shares and Stock Brokers opined that the election results are unlikely to trigger an immediate and significant impact on India’s equity market.
She emphasized that a strong mandate for the incumbent government could sustain the current bullish trend by ensuring political stability, a factor highly favored by investors.
Kanchan highlighted the importance of stability in fostering a predictable policy environment, conducive to long-term business investment.
Market analysts recommend investors to seize market dips as opportunities for further equity allocation in key markets.
Joseph Thomas, Head of Research at Emkay Wealth Management, noted the equity market’s persistent volatility with a downward bias throughout the week, as it attempted to anticipate election outcomes.
He underscored the robustness of economic fundamentals and the enduring upward trend while cautioning about the potential for profit booking given the market’s recent elevation in valuation.
Market experts anticipate a significant rally in the markets on Monday, with large-cap sectors such as financials, capital goods, automobiles, and telecom poised to lead the charge.
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