Elections have far-reaching consequences. It affects not only the political landscape but also the stock market and economy in a very big way. As CY23 is a pre-election year, it will impact market sentiments.
Political transitions often trigger changes in government policies, economic priorities, and regulations, subsequently affecting various sectors. An analysis reveals that while elections introduce volatility in the short term, the long-term trajectory is determined by the government's policy actions, the economic reforms and its ability to foster a conducive business environment. Stability of the government, whether in the form of a majority or a coalition also plays a crucial role.
Historical data of the 10 elections shows equity markets give superior returns near elections, different factors hint at even better returns this time.
With less than a year until India's next general election, the focus is shifting to the year leading up to the polls, as it is during this period that the markets tend to experience significant movement. Based on the historical data of the last four decades and ten elections, it is evident that equity markets have displayed impressive returns as election time approaches. This trend is expected to continue in the current scenario. Several factors indicate that the upcoming returns might surpass those observed in previous elections.
Historical Returns
This story is from the July 2023 edition of Indian Economy & Market.
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This story is from the July 2023 edition of Indian Economy & Market.
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