Indian Equities See Biggest Pre-Election Yearly Surge In Two Decades

Indian stock market recorded the biggest rise in a pre-election year in nearly two decades, gaining by close to 30% ahead of General Elections 2024.

Prior to this, NSE's flagship index had risen nearly 70% ahead of the 2004 elections.

At the time, street expectations had factored in political continuity, along with markets benefitting from the early stages of a capex cycle, resulting in bullish trend in Indian equities.

As expectations were overturned by uncertain results followed by the formation of the United Progressive Alliance—a coalition among the then opposition—Indian equities started declining.

The benchmark subsequently fell 23% over six sessions, since the end of the voting period till the announcement of the results.

While market performance up till the announcement of the 2009 elections were negatively biased from the global financial crisis in 2008, Indian equities were amid a phase of recovery.

The benchmark index recorded positive returns by nearly 26% during the period, beginning with the announcement of elections to the start of the voting process.

As voting started in multiple phases throughout the country, markets remained green, rising by nearly 19% in three days between the end of the voting process and the announcement of results.

As the results got announced on a weekend, markets priced in the political continuity by recording the biggest single-day gain that the benchmarks have ever seen.

The Nifty 50 closed on May 18, 2009, with a rise of 17.7%—a record that has not been broken since.

Markets recorded moderate returns ahead of and amid the general elections for both 2014 as well as 2019, but have surged considerably ahead of the 2024 elections.

The Nifty 50 rose nearly 30%, while broader market indices such as the Nifty Smallcap 250 have grown by nearly twice over the same period.