How will Election Results Impact our Share Market?

Pranav Lodh

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During elections markets are very volatile because elections are the times which bring the most volatility because of uncertainty. Fundamentally speaking, just as economic changes and political changes have a huge impact on the stock market. It is generally presumed that if the election is won  by the existing government the stock market will perform better as it indicates that the country or region has political stability and the policies of the government remain the same. One of the major reasons that FII invests in India is because India is a democracy where elections are held in a free and fair manner.  As a stock market trading and education institute we at EMS stock market institute keep track of all the elections very closely.  Let us have a look at the factors that determine the relationship between elections and stock markets.

Get Ready for Market Volatility

Every party has a certain set of policies that they promote that affects different industries which affects the stock market as a whole. For example, if one party plans to focus on infrastructure development in the country, the stocks of infrastructure and real estate industries will increase if this party wins. Similarly, if the election manifesto of the winning party has a policy that may adversely affect the chemical sector, such as strict laws for pollution control, it will lead to a decrease in the stock prices of chemical companies.

Impact of Party Policies

The party with better vision for economic growth, people centric policies throughout its tenure and has a better roadmap is more likely to win. If it wins it will create positive market sentiments leading to an increase in general market and share prices. Similarly, if a party with unclear promises shows signs of winning the election, it creates negative market sentiments and will lead to a decline in share prices due to fear in market participants. And remember fear travels faster. The bear attack in this case is fast and fatal.

Maharashtra Elections 2024 : Its Impact on Stock Market

The outcome of the state of Maharashtra assembly elections is very local and hence expected to have minimal impact on the stock market, although it could carry significant political implications, according to experts. Although state elections do not directly impact the functioning of the central government, they can still have some second-order effects.

The Maharashtra Election 2024 has been one of the crucial factors for the markets. Maharashtra is not just a major industrial hub but also accounts for nearly 13-14% of the country’s GDP. It attracts over 30% of foreign investments. The political future of one of the richest states is something that Indian industries and stock markets are keeping a close eye on. The markets have corrected nearly 15% from recent highs. Thus we may say markets are already weak and hence a negative result of elections could possibly further push the markets into bear market.

After Election Results

The state election result is a small factor compared to General elections. The Q3 earnings are just round the corner and the General Budget is just round the corner. These are going to be the next big triggers. We have to think what sectors might be affected by Maharashtra elections. The major sector is Real estate and chemical industries governed by state policies may see some sentiment reaction but no long-term impact. The key economic policies are mostly decided by the Central government. Along with this we also have elections in Jharkhand which is not an industrial belt. Market is too smart to understand that more than elections the macro economic conditions are more important 

Conclusion

Analyzing the impact of elections on the stock market requires study of fundamental analysis. Handling your portfolio during turbulent times requires a good study of option hedging strategies. This requires you to undergo formal training with the Best Trading classes in Pune. EMS, one of the best share trading classes in Pune, serves that need. We pride ourselves in providing the best after classes services like unlimited practice sessions, Dedicated relationship manager and a free demat account and Call us at +91 9561861818 to learn more about our courses.





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