How Will 2024 Lok Sabha Election Results Impact the Stock Market?

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General elections in India are far more decisive for the equity markets and the investors compared to state assembly polls. Historically, more than the post-election performance, the pre-election period rally has provided good returns to the investors.

However, different sectors of the stock market react differently to elections based on their exposure to government policies and regulations. The positive atmosphere created by election results and political stability can attract foreign institutional investors (FIIs) and support the stock market.

Impact on the Indian Economic Market After the Election Results

Previously, Indian stock markets have typically shown subdued responses to election results on the counting day. This means that the immediate impact of election outcomes on the stock market has been relatively limited. However, the 2004 and 2009 Lok Sabha elections were exceptions.

In 2004, the market crashed due to the unexpected victory of the Congress-led UPA (now INDIA) coalition. Conversely, in 2009 and 2014, the Indian markets soared. In the 2019 elections, the markets saw a dip as results were announced. The BJP-led NDA's victory was likely already anticipated, while other economic factors shaped investor behavior. For more market insights and updates, download the Bajaj Broking app.

Post-Election Performance of Indian Stock Indices:

Overall Market Performance in the Last 4 General Elections

Below is a table summarising the overall market performance during the last four general elections.

General Elections

Market Performance

Key Highlights


Nifty gained 26.70% in the six months leading to the election.

The UPA coalition led by Manmohan Singh came to power.


Nifty gained 37.80% before the election.

UPA retained power under Manmohan Singh’s leadership.


Nifty gained 51.74% in the pre-election period.

BJP secured a majority, and Narendra Modi became Prime Minister.


Nifty gained 55.80% ahead of the election.

BJP-led NDA won with Narendra Modi as PM again.

2004 - UPA Victory Surge

The UPA, led by Manmohan Singh, won the elections, which positively influenced the market. In the six months leading up to the election, the Nifty index saw a significant gain of 26.70%. Investors were optimistic about the continuity of economic reforms under the UPA government, fostering a positive market sentiment.

2009 - Congress Retains Power

The UPA retained power with Manmohan Singh as Prime Minister. Before the election, the Nifty surged by 37.80%, driven by anticipation of stable governance and pro-business policies, which contributed to the bullish trend.

2014 - BJP Comes to Power

The BJP-led NDA won the majority in the election, making Narendra Modi the Prime Minister. The market responded positively, with the Nifty index surging by 51.74% in the pre-election period. Investors were optimistic about the BJP's pro-reform agenda and the prospect of decisive leadership.

2019 - Modi Wins Again

The BJP-led NDA has won the election again, bringing Narendra Modi back as Prime Minister. This victory coincided with a significant surge in the Nifty, which climbed 55.80% ahead of the election. The bullish market sentiment was driven by confidence in Modi’s leadership, his reforms, and the stability he promises.

Broad Overall Market Insights from Indian Stock Markets During Election

Which Sectors or Industries are Expected to Boom After 4th June 2024?

Following the announcement of the election results, the newly elected government will begin implementing its policies. However, given India's current economic performance, significant growth is anticipated in these sectors after June 4th.

Power Sector

Two months ago, the Ministry of Power released the draft National Electricity Plan, proposing a ₹4.75 lakh crore investment till 2027 to upgrade India's transmission system. India aims to boost its installed capacity to 900 GW by 2032, up from 426 GW currently.


If the BJP is re-elected, the momentum in infrastructure development and capital expenditure is anticipated to persist. Ambitious initiatives such as bullet trains, expanded highway networks connecting more cities, and new waterways projects may be announced.

Real Estate

The housing market in India is booming due to high demand and supportive government policies, including increased capital expenditure. Housing inventories are at a 12-year low, with demand outpacing supply. In 2023, housing volumes surged by 25%, nearly doubling over three years.


India’s hospitality sector is set to grow in the next 3-5 years. The average daily rate (ADR) per room is now ₹6900, higher than pre-COVID levels. The rate of occupancy has improved to 66%, up from earlier levels. Revenue per Available Room (RevPAR) has increased to ₹4540.

Electronics System Design & Manufacturing (ESDM)

The Indian ESDM market is expected to grow by 34%, reaching $110 billion in five years. To manage the current account deficit (CAD) affected by imports, the government is offering major incentives and a ₹76,000 crore PLI & DLI grant for the sector.

How Do Investors Decide What to Buy and What to Sell?

Many often wonder how to navigate the stock market during election cycles. While elections can introduce uncertainty, there are some strategies that seasoned investors consider.


Political Stability: Investors often favour parties or leaders who are perceived to be supportive of stable economic policies. They may buy stocks of companies that are expected to benefit from continuity in governance and policies.

Policy Expectations: Investors analyse the manifestos and statements of political parties to gauge potential changes in economic policies. They may buy or sell stocks based on expectations of policy shifts in sectors such as defence, infrastructure, tourism, FMCG and automobiles.

Foreign Investment: Investors also consider the impact of elections on foreign investment sentiment. Political stability and favourable policies can attract foreign investors, leading to buying activity in certain sectors or stocks.

Long-Term Outlook: Some investors focus on the long-term outlook rather than short-term election-related fluctuations. They may stick to fundamentally strong companies or sectors regardless of election outcomes.

In Conclusion

Looking ahead to the calendar year 2024, it seems India's economy will keep growing, even if there are some hurdles. Election years usually mean good news for markets, but it's best to keep it safe and cautious. Small companies might bring bigger rewards, but bigger ones could be steadier investments. Grabbing opportunities when markets dip is a smart move. Just keep your long-term goals intact and be flexible with your investment approach.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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Frequently Asked Questions

What are the immediate market reactions to the Indian election results?

Answer Field

In the past, Indian stock markets have often remained subdued in their reactions to election results as they're announced. In 2004 and 2009, the markets reacted strongly to election results. The Nifty fell 12.2% in 2004 due to the unexpected victory of the Congress-led UPA, while it soared 17.7% in 2009. However, in 2014, Nifty rose 1.1% while in 2019, it dropped 0.7%.

How should investors adjust their portfolios following the election results?

Answer Field

Investors should avoid knee-jerk reactions based solely on election results. Rather, one must focus on building a robust, diversified portfolio to sail through uncertain political and economic events.

Which sectors are likely to benefit the most from the new government policies?

Answer Field

If the NDA government is re-elected, the sectors that will remain in focus include manufacturing, new-age technology, infrastructure, clean energy, and defence. However, if the INDIA alliance wins, sectors like FMCG, retail, logistics and consumer durables will remain in focus.

How do foreign investors view the Indian market post-election?

Answer Field

Investors are cautiously optimistic about the Indian market, expecting short-term volatility but favouring a positive long-term outlook. They anticipate economic stability and ongoing policy reforms post the 2024 elections, which boosts their confidence.

How might the election results affect the Indian rupee and its impact on the stock market?

Answer Field

If foreign investors perceive the result positively, it can lead to increased foreign capital inflows, leading to rupee appreciation. Conversely, political instability or policy uncertainty may cause capital flight, weakening the INR.

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