Navigating Market Volatility Across Indian Elections

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Lok Sabha elections and the stock market are deeply connected. Every election year, the market faces some volatility. This year has the same story as well.

2014 Elections: Anticipating Swings

In 2014, the Lok Sabha elections were held in nine phases between April 7 and May 12, with results declared on May 16. Prior to the elections, a significant surge was observed in the market. Nifty escalated from 6,041 points on February 10 to 6,776 points by April 7, while the Sensex climbed from 20,414 points to 22,628 points. Although the market experienced some stability between April 7 and April 28, another rally ensued until May 19, propelling Nifty to 7,367 points and Sensex to 24,693 points.

2019 Elections: A Familiar Trend

Similarly, in 2019, Lok Sabha elections spanned seven phases from April 11 to May 19, with results declared on May 23. Leading up to the elections, the market witnessed an upward trend, with Nifty rising from 10,738 points on February 18 to 11,752 points by April 15, accompanied by the Sensex’s climb from 20,414 points to 22,628 points.

Current Elections: Riding the Waves

In the current election cycle, voting is scheduled across seven phases from April 19 to June 1, with results anticipated on June 4. Once again, the market experienced an initial surge before the elections, with Nifty climbing from 21,839 points on March 20 to 22,753 points by April 10, accompanied by the Sensex’s rise from 72,101 points to 75,038 points.

Understanding Volatility: The India VIX Factor

India’s Volatility Index (VIX), a measure of market volatility, exhibited a noticeable increase during Lok Sabha elections, with the surge beginning 22 days before the 2014 elections and 35 days before the 2019 elections.

Current Scenario: Finding Stability Amid Uncertainty

Subsequently, a decline ensued, with Nifty and Sensex slipping to 21,995 points and 72,488 points, respectively, by April 18. Since then, Nifty has fluctuated between 22,750 points and 22,800 points, while Sensex has traded within the range of 72,000 points to 75,100 points.

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