Election Impact: Stock Market Reactions & Investment Tips

People around the world were eager to see the results of India's general election. During the election, the Indian stock market, especially the Nifty 50 and Bank Nifty on NSE India, experienced big ups and downs, showing potential investment opportunities. Here’s a look at how these results affected stock market investments.

Before the election results were announced, the markets went up by 3% on June 3, 2024. However, on the day the results came out, the markets dropped by 6%. Then, the next day on June 5, they went up again by about 3%. This shows how volatile the markets can be during elections.

How Nifty Has Performed on Past Election Days

• May 23, 2019: Nifty ↓ 0.7%
• May 16, 2014: Nifty ↑ 1.12%
• May 16, 2009 (Saturday): On the following Monday, Nifty ↑ 17.74%
• May 13, 2004: Nifty ↑ 0.37%

October 6, 1999: After the Kargil war, Nifty ↑ 1%

These market changes reflect the uncertainty and investor emotions tied to political results. The recent elections sparked questions about whether people expected another major win for the Modi government or if the exit polls were misleading. This uncertainty caused panic selling, resulting in a loss of about ₹26 lakh crore in intraday trading.

Market Correction as a Buying Opportunity

Even though the market has recently dropped, it might be a good time to invest. History shows that these dips after elections are temporary, and India’s economy keeps growing in the long run, no matter which party wins.

Market Performance After Elections:

*The drop in 2019 was mainly due to the COVID-19 pandemic in March 2020.

What Should You Do During Market Volatility?

Given the likely ups and downs in the Indian markets over the next few days, here’s what investors should consider:

1. Don't Sell, Instead, Buy the Dip

If you’re investing for the long term, don’t let this dip scare you into selling. Actually, now is a fantastic time to expand your assets and reduce your overall cost by purchasing more shares.

2. Expand Your Horizons

Increase the amount of solid investments in your portfolio if market fluctuations give you anxiety. If you want to balance out your stock holdings, think about investing in debt mutual funds or gold funds.

Don't pass up this chance to purchase. Cheers to your successful investing!

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Author- Ayush Naik 

Ayush Naik is an expert in personal finance with an MBA in Finance. With over five years of experience working alongside stock market traders, Ayush has a deep understanding of market dynamics and investment strategies. His practical insights and analytical skills have helped many individuals navigate the complexities of financial planning and investment. Ayush’s professional background and commitment to educating others make him a valuable contributor to our personal finance blog.