Advances in Consumer Research
Issue 4 : 2346-2360
Original Article
Electoral impact on equity and reactionary sectoral market movement reflecting consumer and investor sentiments
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1
Assistant Professor, SIES College of Management Studies, University of Mumbai, India
2
Associate Professor, St Francis Institute of Management, India
3
MMS, SIESCOMS, University of Mumbai, India
Abstract

The research paper assesses the Indian general elections and the iterative impact on the equity  market from 1991 to 2024. The major stock market indicators on Sensex and Nifty indices, and the successive impact on major sectors to general elections has been studied. This study aims to enhance understanding of how political events influence stock market behavior, aiding stakeholders in making informed decisions. Our research shows that during election times, the Indian stock market often becomes more unpredictable. Uncertainty weighs over risk of decisions and election result. Stock prices are more volatile than usual. This happens because investors are unsure about what will happen after the election. However, we've noticed that even though the market might be volatile during elections, it usually recovers and grows over time. This shows that the Indian stock market is resilient – it can bounce back from short-term uncertainties. When election results are surprising, the market tends to react more strongly. For example, if a party that wasn't expected to win comes into power, we might see bigger changes in stock prices right after the election. On the other hand, when a government that people are familiar with gets re-elected, the market often responds positively. This is because investors feel more confident when they know what to expect from the government's policies. Different sectors of the economy react differently to elections- FMCG, Technology Financial Services and Infrastructure. Over the years, we've seen that the Indian stock market has become more mature in how it handles elections. It doesn't panic as much as it used to when there are political changes. This shows that investors are getting more experienced and understand that short-term political events don't always affect long-term economic growth. When we look at the numbers closely, we see that despite the ups and downs during election times, both Sensex and Nifty have grown significantly over the years. This reflects how India's economy has been growing overall.

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