After exit polls predicted a huge surge for NDA from the 2014 tally, the first-round results made the market jittery. The volatility index India VIX had spiked to 25.06. Benchmark indices Sensex and Nifty opened on a negative note on June 4, 2024, and quickly dropped over 3 per cent as markets were in for a negative surprise of BJP not securing a huge majority. Then it showed signs of recovering from its fears as the trend showed a reversal in favour of NDA. However, at around 11 am, disappointment set in at bourses as traders feel a bleak chance of any coalition securing a comfortable majority leading to fears of a hung house.
At 11 am, Nifty was at 22,034, down 1,255 points or 5.40 per cent lower. Meanwhile, Sensex dipped to 72,669 points, down 3,799 points or 4.85 per cent lower. According to the Election Commission of India's data, around 8 per cent of the vote only has been counted up to 10.25 am when NDA leads in 269 sea:\ts and INDI Alliance leads in 178 seats.
On June 3, 2024, both indices had soared to new all-time highs, with Sensex rallying over 2,500 points and Nifty recording its 4-year biggest jump of 700 points, driven by exit poll projections. Exit polls had predicted a decisive victory for NDA with its tally crossing 370 seats.
Historical trends in the 2014 Lok Sabha elections and 2019 Lok Sabha elections have shown trends of the rally in markets in the aftermath of the elections, Within 10 days of the results of the 2019 Loksabha elections, Nifty saw an 800-point jump. Experts noted yesterday that the market is already at a high due to exit poll predictions, and if the market participants get disappointed when NDA doesn't reach around 350 seats, it may dip today. They also predicted that if NDA performs over and above the exit poll predictions securing power in Andhra Pradesh and Odisha in State Assembly elections, the bourses might see a heavy bull run in the coming weeks.
Expert Take On Market Volatility: Pointers For Investors
Basavaraj Tonagatti, a certified financial planner (CFP) said, "Looking back at the data of Nifty 50 over the past 25 years, which includes around 5 Loksabha elections, it becomes evident that the market may experience volatility for a few days or even a few months following the election results. However, this volatility has little to no impact on long-term investors. It is important to note that a stable government does contribute to the country's growth, but what truly matters is the overall economic growth. Therefore, instead of making decisions based on short-term volatility, it is advisable to adhere to your defined asset allocation and continue with your investment strategy as usual."
