Arthgyaan

Supporting everyone's personal finance journey

How much return do we expect from the stock market now that the elections are over?

This article uses historical data to estimate returns expected from the stock market post-election.

How much return do we expect from the stock market now that the elections are over?


Posted on 12 Jun 2024
Author: Sayan Sircar
6 mins read
📢Join 2500+ readers on WhatsApp and get new post notifications!

This article uses historical data to estimate returns expected from the stock market post-election.

How much return do we expect from the stock market now that the elections are over?

This article is a part of our detailed article series on Election 2024 and the following market gyrations. Ensure you have read the other parts here:

📚 Topics covered:

When can we measure the impact of elections on the stock market?

SENSEX and Election Results

Stock trading started in India in 1875 with the “Native Share and Stock Broker’s Association” which later became the Bombay Stock Exchange (BSE). However, the SENSEX index with 30 stocks started in 1979 allowing us to measure the impact of election results on the stock market since the 7th Lok Sabha elections of Feb 1980.

Election Year Result on
7 1980 Wed 06-Feb-80
8 1984-1985 Sat 29-Dec-84
9 1989 Mon 27-Nov-89
10 1991 Sun 16-Jun-91
11 1996 Wed 08-May-96
12 1998 Tue 03-Mar-98
13 1999 Wed 06-Oct-99
14 2004 Thu 13-May-04
15 2009 Sat 16-May-09
16 2014 Fri 16-May-14
17 2019 Thu 23-May-19
18 2024 Tue 04-Jun-24

In this analysis, we will use the value of the SENSEX Total Return Index that shows the price change of the 30 SENSEX stocks (the usual SENSEX that you see everywhere) and reinvests the dividends from these stocks back into the index. This adjustment gives a complete picture of the returns for an investor who benefits from both stocks going up in price and the dividends they declare.

We are using the median (middle value from a list) instead of the average of the returns to avoid impacting the result due to extreme values in the 1980s to 1990. The charts below show the changes in the SENSEX index measured from the election result declaration day.

How did the share market behave before the Lok Sabha Elections?

Stock market movement leading upto a Lok Sabha Election

The chart indicates a trend of increased volatility in the stock market in the periods leading up to the Lok Sabha elections. Volatility can be a trader’s friend or that of the disciplined stock investor with a watchlist of stocks and spare capital.

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

Also read
Which stage of your career is most important for wealth creation?

How did the share market behave after the Lok Sabha Elections?

Stock market movement after a Lok Sabha Election

What can we conclude from these results?

Effect of Lok Sabha Elections on the Stock Market In India

Stock markets are affected by elections more in the short term than in the long term. In the long term, the market prefers a stable government and consistent policies.

In the short term, both leading up to and post the elections, there will be considerable market volatility.

Related:
What do you need to make money when the stock market suddenly drops like 4th June 2024?

Long-term investors should take comfort in the India growth story and continue to invest as per their investment plan. The election period is nothing but a blip in the journey.

What's next? You can join the Arthgyaan WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

To understand how this article can help you:

If you have a comment or question about this article

The following button will open a form with the link of this page populated for context:

If you liked this article, please leave us a rating

The following button will take you to Trustpilot:

Discover an article from the archives

Previous and next articles:

<p>This article discusses the strategies needed to profit off sudden market falls like that happened on election results day on 4th June 2024.</p>
Market Movements
What do you need to make money when the stock market suddenly drops like 4th June 2024?

This article discusses the strategies needed to profit off sudden market falls like that happened on election results day on 4th June 2024.

Published: 9 June 2024

12 MIN READ


<p>This article discusses the blistering performance of the Nifty Defence index and how much defence stocks have beaten the broad market since its launch.</p>
Review
The NIFTY Defence Index has risen more than 6x in 6 years. Should you invest?

This article discusses the blistering performance of the Nifty Defence index and how much defence stocks have beaten the broad market since its launch.

Published: 14 June 2024

6 MIN READ


Latest articles:

<p>This article discusses the NFO of the Motilal Oswal Nifty Defence Index Fund which is the second fund tracking the Nifty Defence Index.</p>
Review Mutual Funds
Motilal Oswal Nifty Defence Index Fund NFO is now open: should you invest?

This article discusses the NFO of the Motilal Oswal Nifty Defence Index Fund which is the second fund tracking the Nifty Defence Index.

Published: 15 June 2024

5 MIN READ


<p>This article discusses the Nifty EV & New Age Automotive Index covering the EV ecosystem or new-age auto technologies in India and whether these stocks are suitable for investors.</p>
Review
NSE launches the Nifty EV & New Age Automotive Index. Should you invest?

This article discusses the Nifty EV & New Age Automotive Index covering the EV ecosystem or new-age auto technologies in India and whether these stocks are suitable for investors.

Published: 14 June 2024

7 MIN READ


Topics you will like:

Asset Allocation (21) Basics (8) Behaviour (14) Budgeting (12) Calculator (25) Case Study (6) Children (17) Choosing Investments (37) FAQ (12) FIRE (13) Fixed Deposit (9) Gold (22) Health Insurance (5) House Purchase (33) Insurance (17) International Investing (13) Life Stages (2) Loans (20) Market Data (9) Market Movements (20) Mutual Funds (50) NPS (9) NRI (19) News (20) Pension (8) Portfolio Construction (53) Portfolio Review (27) Reader Questions (8) Real Estate (7) Research (5) Retirement (38) Review (19) Risk (7) Safe Withdrawal Rate (5) Set Goals (28) Step by step (15) Tax (61)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.

More posts...

Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled How much return do we expect from the stock market now that the elections are over? first appeared on 12 Jun 2024 at https://arthgyaan.com


We are currently at 415 posts and growing fast. Search this site:
Copyright © 2021-2024 Arthgyaan.com. All rights reserved.