The 2024 Lok Sabha election will have seven stages beginning on April 19. The much-anticipated general election dates were revealed on Saturday by the Election Commission of India.
The first phase will take place on April 19, and the final phase will take place on June 1. The votes will be tallied on June 4.
With more than 97 crore individuals registered to vote, India will host the largest election in history.
This year's Lok Sabha election will be conducted using more than 10 lakh polling places and 55 lakh electronic voting machines (EVMs).
In the meantime, the stock market is preparing for this monumental event, which may affect investor mood.
Domestic stock markets are soaring in 2024, heading for all-time highs as the overall economy continues to exhibit strong growth.
The SENSEX reached a peak of 74,245 in March 2024, while the NIFTY50 reached a lifetime high of 22,526, respectively.
This election year, both indexes have shown positive returns so far. Keep reading to know more about Stock Market Prediction.
A Key Factor Influencing The Path Of The Market And Economy In 2024 Will Be The Lok Sabha Election
Before this election year even begins, stocks are already hovering at all-time highs. If the current administration wins, policy continuity could be guaranteed.
But the number of the party that wins seats in parliament is also quite important since it might affect the agenda for administrative change.
The Indian economy has shown resilience in the wake of the epidemic. Thanks to expansion in the manufacturing and service sectors, it grew by 8.4% annually in Q3 FY24, the highest growth since Q2 2022.
The robust domestic economy has also bolstered the Stock Market Prediction. Moreounts are being opened than ever before.
The number of demat account holders as of December 2023 was 13.93 crore, a 28.6% increase from the previous year.
As of February 29, 2024, mutual fund total assets under management (AUM) have increased six times in 10 years, from ₹9.16 lakh crore to over ₹54.5 lakh crore.
Results of the Election
The stock market's response to election outcomes is quick and often spectacular. Positive market responses often result from investors feeling reassured by a stable administration with a clear mandate.
On the other hand, market volatility may result from a disjointed or unclear election result.
Following election results, the average one-month return is -(0.2)%, while the average one-year return is 12%. Investors search for government stability.
According to a recent analysis by Morgan Stanley, in the event that the incumbent administration secures a resounding victory in the 2024 elections, the market may rise anywhere from 0% to 5% in the three months after the vote.
The market might drop by 5% to 25% if the administration is unable to secure a clear majority and a coalition government is established.
The stock market might plunge by a staggering 40% if the BJP government falls and the main party receives less than 200 seats, forging a weak coalition that would imply little authority. The worst-case situation would apply.
What Has The Market Done In The Last Four General Elections?
The benchmark index NIFTY50 has returned positively after the election results, as the table below demonstrates.
The last election in which the NIFTY50 finished lower than expected before the outcome was announced was in 2004. In terms of returns provided by the benchmark index, the 2009 election year is at the top of the list.
The US banking system's recovery from the 2008 crisis is to blame for this outperformance.
Following the publication of the results, significant foreign capital inflows following the US's quantitative easing policies gave Indian markets a boost that persisted for the rest of the year.
2019 was a very slow year for returns due to both slow local and global economic development.
The US Federal Reserve's ongoing rate rises and the trade spat between the US and China are major market drivers.
Conclusion
Elections often cause short-term market volatility and uncertainty. However, as Election Day approaches, the market usually levels out, and investors can have a better picture of the political landscape.
By making investments before the election, investors might put themselves in a position to profit from any favourable market movement.
However, if the stock market collapses after the election, investors should consider long-term investment objectives and avoid short-term market responses.
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