New Delhi: Looking ahead to India’s general election, it’s crucial to understand how elections can impact the Indian Stock market. While they often introduce short-term volatility, their real impact is seen through economic initiatives that follow. Elections are pivotal moments that shape both the economic and political landscape of a democratic nation like India. They influence market dynamics and capture the attention of investors, guiding economic policies and investor sentiment.
With the 2024 general election underway and Prime Minister Narendra Modi seeking a historic third term, reports suggest that the current election won’t have a significant long-term effect on equity markets. Historically, the Nifty indices have generally shown an upward trend around election periods, as outlined in the previous report.
The report projects the Nifty 50 index to range between 30,000 and 35,000 points in the next three years. Despite market challenges and volatility, the Nifty index has shown resilience over the last 30 years, with a compound annual growth rate (CAGR) of approximately 13 percent.
Even during periods of political instability, like the weakest coalition government from 1996 to 1998, the index still managed to yield slightly positive returns after significant volatility. This historical perspective indicates a robust long-term outlook for equity markets despite election-related uncertainties.
Kislay Upadhyay, small case manager & Founder of FidelFolio, commented, “As the country prepares for another crucial election, investors are closely watching the market’s performance. However, global issues such as tensions in the Middle East, the Russia-Ukraine conflict, and poor economic indicators from major economies could impact the Indian stock market. Therefore, the usual post-election review may not be as relevant this time due to global dynamics potentially overshadowing election outcomes.”
The report suggests that stocks in certain sectors, like banking, healthcare, and consumer goods, are likely to do well this year. However, it’s important for investors to stay flexible and watchful because the global situation can change.
