Stock Market and the 2024 Elections: A Detailed Analysis

The world’s largest democracy, India, is gearing up for the 2024 general elections. As we inch closer to the D-day, the anticipation and excitement are palpable, not just in the political arena but also in the Indian stock markets. This blog post aims to explore the intricate relationship between the Indian stock market and the upcoming general elections.

The Stock Market as a Political Barometer

The Indian stock market often functions as a barometer of political sentiment and economic stability during election periods. Investors closely monitor election developments, as the outcome can significantly influence market dynamics.

Pre-election Volatility

In the lead-up to general elections, the stock market typically experiences increased volatility. Uncertainty about the election outcome and potential policy changes contribute to this volatility. Historical data shows that the market has performed well in the pre-election year, with an average return of 29.1%. In the one month before the election, the market has given an average return of 6%.

Election Outcomes and Market Reactions

The stock market’s reaction to election results is swift and often dramatic. A stable government with a clear mandate tends to reassure investors, leading to positive market reactions. Conversely, a fragmented or uncertain election outcome can lead to market turbulence.

Predictions for the 2024 Elections

Morgan Stanley has outlined four possible scenarios for the 2024 Indian General Elections with a market impact ranging from a thrilling 5% rise to a nerve-wracking 40% decline.

  • Case 1: If the current government wins with over 260 seats or an absolute majority, the Sensex will likely gain anywhere between 0% and 5% in three months after the elections.
  • Case 2: If the lead party, BJP, wins less than 240 seats and has to form a coalition government, then it’s not great for the stock market and will be less than ideal. In this situation, Indian markets could decline by 5-7%.
  • Case 3: If the leading party gets around 225+ seats and takes control of the government, but a different party has a strong position in the house, the stock market might experience a big drop of up to 20-25%.
  • Case 4: If the current government loses, and the leading party gets fewer than 200 seats, forming a weak coalition with little power, the stock market could crash by a massive 40%.


The upcoming 2024 general elections are expected to have a significant impact on the Indian stock market. While the market’s reaction to the election results can be unpredictable, understanding these dynamics can help investors make informed decisions. As the election draws closer, it will be interesting to see how the market responds to the political developments.

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