Stock Market Volatility around 2024 General Elections

The stage is set for a roller-coaster ride for stock markets. The dates are finally out for the 2024 General Elections starting on 19th April and the results being announced on 4th June.

Will BJP secure a hat-trick, or the Opposition will spring a surprise; we will have to wait and watch. The seven-phase, 78-day Lok Sabha elections will have a significant bearing on the stock market behaviour.

Also, this year is special because there will be Presidential Elections in the US too in November, and it will be important to track the trends, market dynamics, policy changes and political stability or probably instability.

The Election History

However, for India, if you see historic data (last four cycles), the stock market has always been volatile preceding, during and following the elections; however, investors have always achieved above average returns.

Despite short-term volatility, in the long run, markets have always responded favourably and I believe it will continue to be robust this year too, with some other sectors to also watch out for such as infrastructure, auto and banking.

India on a High

The way Indian government is putting in efforts and spending on railways and defense with a larger focus on the Amrit Kaal era and ‘Make In India’ initiative, it has led to a huge increase in market capitalization, and investors should be very optimistic.

There is also a growing confidence in Public Sector Undertakings (PSUs) who have witnessed a strong performance. If you look at the last one year, PSU stocks have shown significant profitability. In 2023, Nifty PSE index surged by 77%, which has outdone Nifty 50’s return of 20%.

Be Cautious

We have always seen fluctuations as a lead-up to the elections, but investors need to be cautious not to make impulsive decisions based on short-term market movements, rather, focus on long-term growth through a well-diversified portfolio.

It’s important to be agile to act, adapt and adjust portfolios based on any new developments, while making informed decisions influenced by broader economic factors, corporate performance, and global trends.

Market Shake or Market Shape

So, will this year’s elections Shake or Shape your stocks in 2024? Let’s see what happens. What’s your take?

PS: Amidst this excitement, let’s also gear up for this year’s IPL which started on 22nd March.