Elections 2024: How Stock Markets Reacted To Lok Sabha Polls In Recent Years

As Lok Sabha elections are set to commence today, here is how the stock market has reacted to the polls in past years
Indian Stock Market
Indian Stock Market

As the Lok Sabha elections are set to commence today, market participants are keeping their eyes fixed on the benchmark indices. While markets have remained volatile in the past months, largely owing to the geopolitical tensions brewing in the Middle East and longer-than-expected high interest rates, the election season has somehow kept the Dalal street on an optimistic edge. 

This became quite evident when the NDA government witnessed a big win during state elections in December last year. Sensex and Nifty made record gains even during muted global cues.

Under BJP-headed PM Modi's 10-year regime, Sensex has surged over three-fold, from 24,000 pts to 75,000 pts. Nifty followed a similar trail, crossing the 22,700-point mark in 2024 from nearly 7,200 points in 2014.

However, when election outcomes differ from what people usually anticipated, it can trigger the market as bears start taking the charge. For instance, when Congress formed the government in 2004 instead of the expected NDA-led government, the stock market took a fall. This dissimilarity between expectations and reality led to a sharp correction in the market.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services believes that the market has already discounted BJP/NDA victory in the elections. The pre-election rally started on 4 December'23 when the Sensex rallied by 1,384 points in response to the state election results.

Also Read: Lok Sabha Elections 2024: Here Are 5 Key Industrialists Fighting For A Seat In Parliament

"The rally continued since then when most surveys predicted a comfortable majority of the BJP/NDA in the general elections. In brief, BJP’s return to power is already discounted by the market and, therefore, when the actual results are announced it is likely that there won’t be any major market response," he said.

It's worth noting that the trajectory of the Sensex has surged during the NDA government's regime. The CAGR of the index took an upshot when the Modi-led government came to power for the second consecutive time in the 2019 Lok Sabha elections.

India's stock market has soared to become the world's fourth-largest. While the increased market participation has a lot to do with the uptick in ranking, strong economic figures and political stability have also contributed to the same.

Related Stories

No stories found.
Outlook Business & Money