Impact of elections on

Indian Stock Market

Electoral stock market patterns, sectoral impacts, market volatilities, market
performance and uncertainties that come with election years.
 How election impacted

US Stock Markets?
Equities tend to yield gains of about 8.5% and bond markets yield returns
of 7.5% in a standard 12-month period, but this figure diminishes to below
6% and 6.5% in the year preceding a presidential election.

2000 George W.Bush (R) 4.50% 21.9% -10.1%

2004 George W.Bush (R) 7.6% 6.4% 9.0%
2008 Barack Obama (D) -35.8% 8.2% -38.4%
2012 Barack Obama (D) 13.1% 24.4% 13.4%
2016 Donald Trump (R) 1.7% 21.5% 9.5%
2020 Joe Biden (D) 7.5% 39.9% 16.3%

AVG 8.4% 9.3% 8.0%

 What about Indian Context?
The average return one year before the elections is 29.1%, and
in the one month before elections, the average return is 6%.

Before Election After Results 2yr Return

Results Election

Lok Sabha 1 year 1 month 1 month 1 month

results

6th oct 1999 50.7 3.3 -0.8 -13.1 37.6

13th May 2004 98.1 -7.5 -14.4 23.3 121.5

17th May 2009 -24.9 26.8 6.8 31.9 7.0

16th May 2014 16.6 8.0 7.1 20.6 37.1

23rd May 2019 5.2 -0.4 0.1 -2.8 2.4

Average 29.1 6.0 -0.2 12.0 41.1

Broad Market Insights
for Indian Stock Markets During Elections

As volatility subside and the

economy becomes politically
stable which led to positive
returns in financial markets after
the election. These goods often
rewards investor who stayed
during time of uncertainty
VS
Which sectors outperform and
underperform in Elections?

Post Election Outperformers: Pharma, Auto sector

Consistent Performers: Pvt Bank & PSUs

Underperformers: IT sector, Metal sector

VS
 Which Investing Strategies

(Factors) do well in Elections

Alpha: Highest returns

Dividends & Volatility: consistently

positive returns

Quality, Momentum, Value :

Modest returns
 Stock market is not
dependent on elections
Different Govt bring different reforms paving way for
positive returns in their own era with some negative era

UPA’s Second Term:

Stable Returns no
major political shift 2019

NDA in Power: FDI 2014

boosting the
economy
2009 BJP Continues in
Power: High Growth
led by Political
stability
2004 NDA’s Return (Modi
Wave): Structural
reforms

1999

UPA Era: Major

Reforms
 Analyst Tracker
Who will win 2024 Indian stock market elections?

A Morgan Stanley report on the 2024

elections predicts clear majority win by
the current government could lead to a
market gain of 0% to 5% in the
subsequent 3 months
Jefferies finds a 10% probability of a BJP
defeat in 2024 and expects markets to
correct by 25%
The most negative scenario will be
leading party having fewer than 200
seats, could result in crash upto 40%
2024
Elections
 Outlook for the Indian
economy going forward
Broad economic direction of India will
remain the same, which is pro-growth,
regardless of the governing party.

It will focus on aspects like infrastructure, 1980

reforms aimed at improving productivity,
suggesting a continuity in policies aimed at a
market-driven economy, making it resilient
against political shifts.

Govt
Changed
11 times

Since 1980, the average real GDP growth is 6.2%,

and Sensex gave 15.5% CAGR returns 2023
 Disclaimer**
Investment in securities market are subject to market risks. Read all the related documents
carefully before investing. Registration granted by SEBI, membership of BASL and
certification from NISM in no way guarantee performance of the intermediary or provide any
assurance of returns to investors. Visit our website for full disclosures.

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