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Elections and its impact on stock markets

With the general elections just a few months away, we have seen several investors being cautious over the equity markets and are either delaying their investments, or worse still pulling back on existing investments.

With the general elections just a few months away, we have seen several investors being cautious over the equity markets and are either delaying their investments, or worse still pulling back on existing investments.

Over the past 28 years, we have seen 7 general elections and we looked at the stock market performance in the 6 month period before and after the elections. In 5 out of 7 such elections, the stock markets ended positive in the 6 month period after the general elections.

In general, it is difficult to forecast stock market outcome based on specific events. Very few investors have actually succeeded in timing markets. The best stock market investors in the world broadly recommend that one stays invested and not time the markets based on such events. Even the data seems to support this thesis and we also agree.

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