How 2019 Elections Impacted Nifty and Sensex

The general elections in India take place every five years. The election period is the most critical time for the stock market, and it experiences significant volatility. This was evident in the Indian stock market during the 2019 elections. 

While there was a notable impact on the Nifty and Sensex on the election result day, various factors were responsible for it. Let us understand how the 2019 election impacted Nifty and Sensex, positively or negatively, and identify the key factors involved.
How Election Have Impacted Sensex and Nifty 50 Performance
Elections have always influenced the stock market, and the 2019 general elections were no exception. With the Bhartiya Janta Party (BJP) led by  Prime Minister Narendra Modi securing another  5-year term, the post-2019 election period witnessed significant fluctuations in the Sensex and Nifty performance.

The 2019 elections resulted in an upswing in the market, driven by expectations of sustained economic reforms and political stability with the re-election of the same government. On the result day of the 2019 elections, the recorded Nifty and Sensex were 12,000 and 40,000, respectively.

However, despite favourable conditions for the stock market, the intraday gains were not the highest recorded. Instead, it was the lowest, with only a 1.2% increase for Sensex and a 1.3% increase for Nifty. These were the lowest gains recorded in Nifty 50 and Sensex compared to the previous election years.

A graph compares Nifty and Sensex's performance post-2019 election and their performance in recent election years.
 

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Following the formation of the new government after the 2019 elections, the market experienced an unusual downfall. Historical records indicate that it was the first time such a negative return was recorded on the result day of general elections. 

Therefore, the election influence on Nifty and Sensex 2019 was not positive. Here is an insight into how the market performed before and after the elections in 2019.

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Although the BJP government again came into power with more seats acquired than in previous election years, the market recorded a major downfall within three months post-election. The graph below illustrates the stock market's decline within three months from the day of the result declaration.

Conclusion

The 2019 general elections undoubtedly marked a significant change in India’s political history, yet they harmed the Sensex and Nifty. As a result, new and broader economic fundamentals were needed to improve the country’s economic situation. This is how the 2019 election impacted Nifty and Sensex in the stock market.