The stock market in India typically experiences fluctuations during Lok Sabha elections, and this year is proving to be no exception. As the nation gears up for its parliamentary polls, investors are closely monitoring market movements amidst the electoral process.
In 2014, the Lok Sabha elections spanned nine phases from April 7 to May 12, with results declared on May 16. Prior to the commencement of polling, there was a notable surge in market indices.
The Nifty, for instance, rose from 6,041 points on February 10 to 6,776 points by April 7, while the Sensex climbed from 20,414 points to 22,628 points during the same period. Following a brief period of stability, the market witnessed another rally, propelling the Nifty to 7,367 points and the Sensex to 24,693 points by May 19.
In the subsequent Lok Sabha elections in 2019, conducted over seven phases from April 11 to May 19, with results announced on May 23, a similar trend was observed.
Prior to the polling, the market experienced an upward trajectory, with Nifty climbing from 10,738 points on February 18 to 11,752 points by April 15, and Sensex rising from 20,414 points to 22,628 points.
However, during the voting period, there was a temporary downturn, with Nifty falling to 11,278 points and Sensex to 37,462 points. Yet, in the weeks following the elections, the market regained momentum, with Nifty reaching 11,922 points and Sensex at 39,714 points by May 27.
The volatility index, India VIX, which reflects market uncertainty, showed a notable increase leading up to both the 2014 and 2019 elections. In 2014, India VIX began to rise 22 days before the elections, while in 2019, this trend was observed 35 days earlier.
This year, as voting takes place in seven phases from April 19 to June 1, with results scheduled for June 4, market dynamics are once again under scrutiny. Ahead of the elections, there was an initial uptick, with Nifty reaching 22,753 points on April 10 from 21,839 points on March 20, and Sensex rising from 72,101 points to 75,038 points during this period.
However, a subsequent decline saw Nifty and Sensex slip to 21,995 points and 72,488 points, respectively, by April 18. Presently, Nifty is trading within the range of 22,750 points to 22,800 points, while Sensex oscillates between 72,000 points and 75,100 points.
Investors are closely monitoring these market movements as India's electoral process unfolds, with anticipation building ahead of the election results.
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