A manic week in Indian equity markets has come to an end. The Nifty 50 index has gained as much as 6.6% from the close on election results day, June 4. What do the next few months have in store for investors? Let’s look at what the past data tells us.
The Nifty50 has clocked gains in the year after three of the last five elections.
A similar trend is visible for the three-month period after the election results. The Nifty50 has gained three out of the last five times.
Remember, all elections except those in 2014 and 2019 resulted in coalition governments of varying complexity.
"As long as the country gets a stable government, the market should be fine," said Renaissance Investment Managers' Pankaj Murarka, who believes India's equity market remains in a bull phase.
Raamdeo Agrawal of Motilal Oswal Group, a Mumbai-based financial services firm, agrees. "Pessimism will pass the equity markets once the government is formed," Agrawal said in a conversation with CNBC-TV18.
You can watch the whole interview here:
ALSO READ: Ex-Bonus shares: Motilal Oswal jumps 20%; Stock doubles in 2024
In fact, the year after the 2019 election results was particularly bad for the stock markets despite Narendra Modi and his allies bagging the biggest majority in Parliament in over 30 years.
It may be that if the stocks have already run up in anticipation of the results, profit booking is inevitable subsequently. The Russia-Ukraine war and the onset of the COVID-19 pandemic also contributed to the sell-off in the months after the 2019 election results.
The best annual return came in the year after the 2009 election result, which saw the biggest-ever farm loan waiver. This move was considered populist and bad for the country's economic health.
Essentially, the context, i.e. valuations and liquidity, decide the market's direction once significant events like elections are over.
So, what are the triggers to watch out for now?
ALSO READ: MC Market Poll In Charts: A look at Nifty outlook, valuation, triggers, and risks
The Nifty50 has clocked gains in the year after three of the last five elections.
| Nifty returns post election results | 1 Week | 1 Month | 3 Months | 1 Year |
| 2019 | 1.77% | -0.12% | -7.74% | -22.99% |
| 2014 | 3.42% | 5.76% | 9.39% | 15.99% |
| 2009 | 15.44% | 23.05% | 24.74% | 38.73% |
| 2004 | -9.77% | -11.84% | -6.6% | 16.2% |
| 1999 | 8.57% | -1.48% | 17.37% | -10.1% |
A similar trend is visible for the three-month period after the election results. The Nifty50 has gained three out of the last five times.
Remember, all elections except those in 2014 and 2019 resulted in coalition governments of varying complexity.
"As long as the country gets a stable government, the market should be fine," said Renaissance Investment Managers' Pankaj Murarka, who believes India's equity market remains in a bull phase.
Raamdeo Agrawal of Motilal Oswal Group, a Mumbai-based financial services firm, agrees. "Pessimism will pass the equity markets once the government is formed," Agrawal said in a conversation with CNBC-TV18.
You can watch the whole interview here:
ALSO READ: Ex-Bonus shares: Motilal Oswal jumps 20%; Stock doubles in 2024
In fact, the year after the 2019 election results was particularly bad for the stock markets despite Narendra Modi and his allies bagging the biggest majority in Parliament in over 30 years.
It may be that if the stocks have already run up in anticipation of the results, profit booking is inevitable subsequently. The Russia-Ukraine war and the onset of the COVID-19 pandemic also contributed to the sell-off in the months after the 2019 election results.
The best annual return came in the year after the 2009 election result, which saw the biggest-ever farm loan waiver. This move was considered populist and bad for the country's economic health.
Essentially, the context, i.e. valuations and liquidity, decide the market's direction once significant events like elections are over.
So, what are the triggers to watch out for now?
- The monsoon season is off to a good start. There are fears of a shortage of onions, potatoes, and apples, but overall, the RBI governor is more at ease now than in February of this year.
Period June Policy April Policy Feb Policy FY25 4.5% 4.5% 4.5% Q1FY25 4.9% 4.9% 5.0% Q2FY25 3.8% 3.8% 4.0% Q3FY25 4.6% 4.6% 4.6% Q4FY25 4.5% 4.5% 4.7%
- The meeting of the US Federal Reserve on June 11 and 12 will be an essential cue for markets worldwide. A rate cut in the US would be good for stocks, but the impending move has only gotten delayed. In March 2024, 70% of economists surveyed expected a rate cut in June. It's now down to 2%, and the possibility of the first rate cut by Jerome Powell is consistently moving closer to the end of the year.
- The markets will also be watching Prime Minister Narendra Modi's new government's policy agenda in the first 100 days. You can track the latest portfolios allocated to different ministers in the Modi 3.0 government here.
- A slew of upcoming state elections in Maharashtra, Haryana, and Jharkhand adds another layer of uncertainty against the backdrop of global political shifts and elections.
ALSO READ: MC Market Poll In Charts: A look at Nifty outlook, valuation, triggers, and risks
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