Impact of Election on Stock Market

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

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.