Impact Of India’s General Election Results On Stock Market - Should You Buy The Market Dip?

The entire world was eagerly waiting for the Indian General Election Results. The Indian stock market saw a dramatic swing around Indian election results highlighting investment opportunities. Here’s an analysis on the impact of Indian election results on stock market investment opportunities.

June 6, 2024
4 mins
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Markets were up by over 3% on June 3, 2024 (one day before the Indian election results) and on the day they were down by 6%.

And, one day later on June 5, they were up by ~3%. 

Aren't the markets really volatile? 

Here’s how the markets have performed on the day of elections in the previous years - 

May 23, 2019: Nifty 0.7%

May 16, 2014: Nifty 1.12%

May 16, 2009 (Saturday): On the following Monday, the Nifty 17.74%

May 13, 2004: Nifty 0.37%

October 6, 1999: Post the Kargil war, Nifty 1%.

Does this mean India was expecting the Modi Government to sweep with majority, yet again? Were the exit polls misleading? Well, let's leave that to the political experts, to debate.

This unforeseen event sent shockwaves through the investor community, triggering a panic-driven selloff that erased approximately ₹26 lakh crore in wealth during intraday trading.

The current market correction, can be your opportunity to shine with your investments. Let any party form the government, this correction is certainly short-lived. We strongly believe in the long term, India’s growth story has no turnaround. 

Here’s how the markets have performed one week, one month, three months, six months and one year after the elections -

Responsive Yearly Data Table
Year One Week One Month Three Months Six Months One Year
1999 (NDA) 8.60%↑ 1.00%↓ 17.40%↑ 6.00%↑ 5.60%↓
2004 (Congress) 1.80%↑ 4.10%↓ 2.30%↑ 21.20%↑ 28.70%↑
2009 (Congress) 15.40%↑ 23.30%↑ 25.50%↑ 39.00%↑ 40.30%↑
2014 (NDA) 3.50%↑ 6.40%↑ 10.50%↑ 19.30%↑ 17.80%↑
2019 (NDA) 1.80%↑ 0.10%↑ 7.10%↓ 2.40%↑ 21.90%↓*

* Markets have corrected significantly during Covid in March 2020.

While, the signals are clear that in the long term the markets reach new heights. 

What should your investment strategy be amidst the current market volatility? For the coming few days, Indian markets may be choppy and highly volatile. Here’s what you should do -

Do NOT Sell, Rather, BUY the DIP📈

If you are a long-term investor, this should not affect you. Don’t sell your holdings, in fact it's time to add more. Investing now, will help you average out the overall cost and accumulate more fund units.

Link Button Buy the Dip


But, if you are unable to turn a blind eye to the markets - add some stability to your portfolio. It's best to diversify your investments beyond equity. Invest in debt mutual funds or gold funds.

Link Button Diversify Your Investments

Don’t let this buying opportunity slide through your hands. 

Happy Investing! 🙂

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