- Nifty 50 gained in the week following all last five US midterm elections
- Nifty rose 0.14% on average on the first day after midterm election results
- S&P 500 showed average gains of 1.40% over one week post midterm elections
As investors look ahead to the US midterm elections and their possible impact on Indian markets, historical data suggests that the NSE Nifty 50 has generally gained ground in the week following the results. While the market's immediate reaction has been mixed, the index has ended higher one week after every US midterm election over the past five cycles.
In a post on X, CA Vivek Khatri shared data comparing the performance of India's Nifty 50 and the US S&P 500 after the last five US midterm elections, held in 2006, 2010, 2014, 2018, and 2022. The data show that the Nifty gained an average of 0.14% on the first trading day after the results, 1.36% over the following week, and 1.95% over one month.
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The S&P 500 recorded average gains of 0.24% on the first day, 1.40% in one week, and 1.68% over one month.
Nifty's Weekly Performance Has Been Consistent
One of the key findings from the historical data is that the Nifty ended higher in all five instances one week after the US midterm election results. However, the index's performance on the first day was less consistent, as there were gains only in three out of five cycles.
Over one month, the index closed higher in four out of five midterm elections in the US.
While the weekly performance was consistently positive, the performance varied through the midterms; for example, in 2006, the index gained 1.77% in a week and 5.70% in a month, but in 2010, it declined 1.75% over one month, though it gained 2.98% in a week from the elections. In 2014, 2018, and 2022, the index recorded gains over both one week and one month.
Nifty 50 Performance After US Midterm Elections
Year | Day 1 | 1 Week | 1 Month |
2006 | -0.56% | +1.77% | +5.70% |
2010 | +0.68% | +2.98% | -1.75% |
2014 | +0.17% | +0.46% | +2.89% |
2018 | +0.65% | +0.50% | +0.68% |
2022 | -0.25% | +1.10% | +2.23% |
What Should Investors Watch?
Khatri pointed out that the immediate market reaction to election results may not provide a clear indication of the market direction for the upcoming weeks.
He also highlighted global developments, including movements in US bond yields, the dollar index, and crude oil prices, which could influence market sentiment. Foreign institutional investor flows are another factor to watch.
According to Khatri's post, the S&P 500 has also ended higher 12 months after every US midterm election since 1982.
However, past performance does not guarantee similar returns in the future. Investors will be watching how global markets respond to the latest election results and whether the historical trend continues to hold.
Also Read: Wall Street's US Midterm Playbook: Which Election Outcome Favours Stocks Most
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