How has 2019 election affected the Indian Stock Market
Election and stock market are two hot topics in India. These two terms can often be heard in
a lot of conversations around us. Do you think these two terms have any effect on each
other?
Let us take a look at how elections affect the stock market or for that matter how did the
latest 2019 election affect the Indian stock market.
Why does elections have an effect on the stock market?
Elections decide which government will reign for the next 5 years and what new economic
reforms and policies they will introduce. It is commonly believed that a stable government at
the centre, which brings about development and investor friendly policies, would set a
growing curve for the economy.
Elections do have an effect on the stock market, but it’s more of a short term or temporary
effect.
the centre, which brings about development and investor friendly policies, would set a
growing curve for the economy.
Elections do have an effect on the stock market, but it’s more of a short term or temporary
effect.
As this data suggest:
●2004: NDA coalition lost the elections, bringing the market down by a rate of 7.4%,
which bounced back to normal in a few months
●2009: UPA came to power causing the market to rise by 17.4% and corrected again
in some months.
●2014: when BJP was elected, the markets opened gap up and succumbed to profit
bookings in a few days time, but came back to trail post that.
With the decision rolling in favour of BJP and a second term for Prime Minister Narendra
Modi, investors were assured of stability and policy continuity.
1.Agriculture
Farmers being the top priority of the government post 2019 election, agricultural
sector is a sure shot winner. Rural-focused companies including those providing
seeds, pesticides, irrigation products, consumer staples and motorbike
manufacturers stand to gain.
2.Real estates
cement companies, pipes, tiles and sanitary-ware manufacturers, capital goods and
infrastructure companies.
3.Rupee
Anticipation about the result of the election,buoyed the Indian Rupee for some
months, increasing its performance in the market. Now with the elections over, the
foreign market investors have their attention back on the oil prices and other issues,
hurting the Indian Rupee.
4.Loan Defaulters
The government has led a crackdown on bad debt as it seeks to restore the health of
the nation’s state-run banks. Loan defaulter sure have a lot to lose.
All in all, elections form an important part of our country which affects each and every field
including the stock market. However, the effects are more short term and the market tend to
bounce back to normal in a certain span of time.
●2009: UPA came to power causing the market to rise by 17.4% and corrected again
in some months.
●2014: when BJP was elected, the markets opened gap up and succumbed to profit
bookings in a few days time, but came back to trail post that.
What effect did the 2019 election have on the stock market?
With the decision rolling in favour of BJP and a second term for Prime Minister Narendra
Modi, investors were assured of stability and policy continuity.
Let us look at different sectors and the election effect on them:
1.Agriculture
sector is a sure shot winner. Rural-focused companies including those providing
seeds, pesticides, irrigation products, consumer staples and motorbike
manufacturers stand to gain.
2.Real estates
With the party focusing on repairing and maintaining the infrastructure of the country,
the infrastructure and real estate sector came out as a winner. Winners includecement companies, pipes, tiles and sanitary-ware manufacturers, capital goods and
infrastructure companies.
3.Rupee
Anticipation about the result of the election,buoyed the Indian Rupee for some
months, increasing its performance in the market. Now with the elections over, the
foreign market investors have their attention back on the oil prices and other issues,
hurting the Indian Rupee.
4.Loan Defaulters
The government has led a crackdown on bad debt as it seeks to restore the health of
the nation’s state-run banks. Loan defaulter sure have a lot to lose.
All in all, elections form an important part of our country which affects each and every field
including the stock market. However, the effects are more short term and the market tend to
bounce back to normal in a certain span of time.
Cedrus Wealth Partners
Pune, Maharashtra.
www.cedruswealth.com
Pune, Maharashtra.
www.cedruswealth.com
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