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Nifty 50 usually gains 6 months pre and post general elections despite volatility: Motilal Oswal

  • Nishadil
  • January 11, 2024
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Nifty 50 usually gains 6 months pre and post general elections despite volatility: Motilal Oswal

Domestic equity benchmark Nifty 50 tends to go higher in six months before and after the general election even though the market may remain volatile for some time post election results, according to brokerage firm . The brokerage firm highlighted data spanning six months before and after the general election results of the last five elections (1999, 2004, 2009, 2014, and 2019) which indicates a consistent upward trend in the benchmark index Nifty50.

The index exhibited growth both preceding and following each election. "An analysis of the past five general elections suggests that the stock market (using point to point data) has exhibited higher returns in the run up to elections, and while there are immediate fluctuations in post election results, the equity market totally absorbs them over time," said Motilal Oswal.

Also Read: "Nifty 50 has grown between 7 per cent and 36 per cent in the six months before general elections since 1999, with an average growth of 21 per cent during the last five elections," Motilal Oswal said. Motilal Oswal underscored that in the quarter following the election results, markets fell twice (in 2004 and 2019); however, they moved into the growth territory within the subsequent quarter (six months after the election results), with an average growth of 14 per cent during the past five elections.

Also Read: The trends are broadly similar for the mid cap and small cap indices as well, Motilal Oswal added. The FPI (foreign portfolio investor) equity inflows have also been positive during the past five pre and post election periods, said the brokerage firm. Also Read: On the other hand, 10 year bond yields have been lower during most elections and there have been no uniform trends in the currency.

"The benchmark 10 year government bond yield fell four times in the last five pre election periods (except in 2004), with an average decline of 40 bps," said Motilal Oswal. One bps is one hundredth of a percentage point. The brokerage firm pointed out that there were no uniform trends in the currency during the last five election years.

"The Indian rupee (INR) weakened in the pre election period in 1999. However, it was broadly stable in 2004 and 2009 while strengthening in 2014 and 2019," Motilal Oswal said. Read all market related news Livemint tops charts as the fastest growing news website in the world to know more. Unlock a world of Benefits! From insightful newsletters to real time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away!.