No Significant Impact Of Election Likely On Equity Market: Fidel Folio

It expects Nifty 50 to reach the range of 30,000-35,000 points in the next three years

Kislay Upadhyay, smallcase manager & Founder of FidelFolio

FinTech BizNews Service   

Mumbai, 29th April 2024: According to an analysis by FidelFolio, the current general election and its outcome would not have any major long-term effect on the equity markets. Apart from few exceptions, the Nifty Indices have often demonstrated an upward trajectory around elections period, according to the report "Deciphering Market Trends: Navigating Pre-Election Dynamics and Global Turbulence” by FidelFolio. It says that Nifty 50 is expected to be between 30,000 and 35,000 points in 3 years.

Despite all of the difficulties and market volatility during the previous 30 years, the Nifty index has provided a CAGR return of ~13% when examining market returns for the period. Despite the weakest coalition government in office from 1996 to 1998, the index managed to provide slightly positive returns following a period of significant volatility.

Kislay Upadhyay, smallcase manager & Founder of FidelFolio stated, “As the country gears up for another crucial election, investors are keenly eyeing the market's performance, wondering whether it will witness a pre-election rally or correction. However, the global scenario paints a contrasting picture. The growing turbulences in the Middle East, the Russia-Ukraine conflict, and the poor economic indicators from the major economies could impact the Indian stock market. Subsequently, the customary three- to six-month post-election review may not be as applicable this time around since global issues could soon eclipse the consequences of the election outcomes.”

In 2014, as illustrated in the graph below, anticipation of a new government and its potential influence on the economic growth spurred a pre-election rally. Indices such as Nifty 100 Quality 30 (13% & 25% from 6% & 10% after 3 & 6 months respectively) and Nifty 200 Momentum (14% & 35% from 11% &13%) saw significant improvements, thus reflecting positive sentiments.

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