Indian Stock Market Gears Up for Lok Sabha Election 2024: What to Expect
As the Lok Sabha election 2024 season kicks off, the Indian stock market is abuzz with anticipation. With various opinion polls projecting a strong win for the incumbent NDA government, investors are already factoring in policy continuity.
Analysts believe that the government’s focus on infrastructure development and fiscal prudence has garnered investor interest in recent years, leading to improved macro variables. However, concerns over low voter turnout initially spooked the markets, with volatility on the rise.
Brokerage firm JM Financial noted that past election cycles have seen heightened volatility in the market, which tends to subside post-election results. With the expectation of policy continuity, the firm predicts healthy gains following the election results on 4th June.
Looking back at the performance of the markets in the last five general elections, JM Financial found that overall stock market returns turned positive three months post-results. Small and mid-cap stocks outperformed large caps in every timeframe, with sectors like Auto, Consumer durables, and Healthcare showing strong performance.
Post-election, the focus will shift to the Union Budget, likely to be tabled in July. JM Financial recommends staying invested and being hedged, with a preference for large caps over SMIDs in 2024. The firm sees valuation comfort in sectors like Private Banks and Consumption space, which are expected to outperform the benchmark in the near term.
As investors gear up for the election results, the market is expected to witness healthy gains, with any dips seen as buying opportunities. While individual sector performance may vary, the overall outlook remains positive for the Indian stock market post-election.
