Market participants, whether domestic or FIIs, have already incorporated the return of the NDA in the upcoming general elections, as per a report by JM Financial Institutional Securities. The primary uncertainty lies in the extent of the majority it would secure in terms of the number of seats, the report stated.
An analysis of Nifty’s trend in the past five elections during the year before and in the election year suggests that Nifty is projected to move towards 20,500 by the end of FY24. Additionally, a 24% return in FY25 is anticipated, according to the report.
The study examined Nifty’s trends one year before general elections in the past five election years (FY96, FY04, FY09, FY14, and FY19). Plotting the average of indexes of these years against the current year’s Nifty indicates that the markets have moved in line with the average of the past five election years.
Following this trend, the Nifty is expected to reach around 20,500 levels by the end of FY24.
A similar analysis was conducted to assess Nifty’s trend in the election year. For this, the average of the last five election years (FY00, FY05, FY10, FY15, FY20) was considered. The average trend suggests an uptrend of 24% in Nifty. However, it’s essential to note that the average was inflated by the 54% return recorded in FY15, the report highlighted.