How Long did it Take to Recapture Pre-Election Stock Market Highs?

The Indian stock market often experiences a surge in optimism in the lead-up to national elections. This is typically driven by expectations of a stable government and positive economic policies. The data confirms this trend, with all five years analysed witnessing pre-election highs in the benchmark Nifty50 index. For instance, in 2024, the Nifty50 reached an all-time high of 23,338.70 on June 3rd, just before the election results.

However, the post-election period paints a more nuanced picture. The table below details the pre-election highs, the date the Nifty50 surpassed those highs again, and the number of days it took to achieve this feat.

Election Year 2004

In 2004, the pre-election ATH was 2,014.65 on January 9. Post-election, it took the market 361 days to break this high, with the new ATH of 2,120.65 being reached on January 4, 2005. This nearly year-long period highlights a cautious market approach and the time taken to digest and react to the new government’s policies.

Election Year 2009

The 2009 elections present a unique case. The pre-election ATH was significantly earlier, on January 8, 2008, at 6,357.10. The market took until December 9, 2013, to surpass this high, reaching 6,415.25. This extended period of 2,162 days underscores the prolonged uncertainty due to Global financial crisis and market challenges faced during this period.

Election Year 2014 and 2019

The 2014 & 2019 elections were pivotal. It took 21 days to break the pre-election ATH in 2014 whereas it only took 11 days for Nifty to break ATH in 2019, showcasing a more gradual but steady rise in investor confidence.

2024: A Case Yet to Unfold

With the 2024 election results still fresh, it’s too early to determine how long it will take for the market to surpass the pre-election high of 23,338.70. The future trajectory will depend on various factors, including the incoming government’s policies, global market conditions, and investor sentiment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.