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Research Macroscope Investor Vs. Election

Investor Vs. Election

Written by - Fisdom Research

March 28, 2024 2 minutes

Valuable Insights From The History

Discipline investors emerged as the ultimate winner

  • Consistent Market Performance: Regardless of election outcomes, the market has consistently delivered returns exceeding 12% over the subsequent three to five years, highlighting its resilience and growth potential. The highest returns were observed between 2004 and 2009 when neither the BJP nor Congress held a majority.
  • Institutional Flows: Historical data shows that Foreign Portfolio Investment (FPI) inflows tend to exhibit a positive response in the period leading up to and following the general elections.
  • MF Impact: Long-term SIP investors reaped the rewards due to their unwavering commitment. Even the underperforming funds yielded returns exceeding 9% in most cases. The leading performer within the core equities segment achieved returns surpassing 20%.
  • Macro Indicators Prevail: Domestic and global macroeconomic indicators exert a more substantial and enduring influence on the markets than election results alone. Factors like economic fundamentals, corporate performance, global events, monetary policies, and geopolitics play pivotal roles.
  • Balancing Short-Term Volatility: While elections can introduce short-term volatility and sentiment fluctuations, it’s essential to focus on the bigger picture, emphasizing a resilient, well-rounded investment approach.

Opinion Polls Suggests A Clear Victory For The BJP

The majority was only observed in the last two general elections starting from 1996

Year  Constituencies NumbersWinner at National LevelSeats contested (Numbers)Seats won (Numbers% share in valid  votes (Per cent)
1991543INC50024436.4
1996543BJP47116120.3
1998543BJP38818225.6
1999543BJP33918223.8
2004543INC41714526.5
2009543INC44020628.6
2014543BJP42828231.3
2019543BJP43630337.7
INC: Indian National Congress, BJP: Bhartiya Janata Party, BLD: Bhartiya Lok Dal, Source: CMIE

Source: India Today-CVOTER, India TV – CNX, Jefferies

NDA’s Surge to 400 Seats Aided by AP, UP & Bihar: Polls

Election Years Often Witness Strong FPI Inflows

In some years, unexpected election results causing no party to secure a majority have led to short-term volatility in flows

Source: Fisdom Research. We have considered Phase 1 of the election as the starting point of the election. *The latest data upto 15th March 2024 has been considered, Data Source: ACE MF

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