Markets rise to polls, may falter later

The stock market gets election fever too. The mercury rises on theexchanges in the run-up to the elections, and drops just as sharply after the process is complete, according to Mumbai-based brokerage KR Choksey Securities. 

However , local market movements will not defy international trends under any circumstances. This time round, says the brokerage, watch how the market starts moving up from March 23 — the polls begin on April 16 — and how it falls from May 6, a week before polling ends in most constituencies. 

The firm has analysed the  generalelections of 1996, 1998, 1999 and 2004. According to its report, 25 days before the elections, the Sensex gained an average of 8.8% and dropped by 28.8% in the 20 days following the elections. 

Punters prefer BJP or Congress-led  governments. VK Sharma, director of Ahmedabad-based Anagram Stock Broking told ET: “If the Left parties or Mayawati appear to play a predominant role in the government, the markets will react bitterly.” 

He adds that if international markets show signs of recovery, domestic markets will “discount all negative (political) news and move upwards.” 

Says DD Sharma, research head at the Mumbaibased Anand Rathi Securities , “If a BJP or Congress-led alliance comes into power, we may see a rally of about a 1000 points in the Nifty. But if we see the Third Front in the driver’s seat, markets may touch the previous low. However, all these projections are valid only for the short term. In the medium-to-long term, global movements will prevail.” 

Mr Sharma believes markets and elections may show a clearer correlation in the later stages, when the election survey and speculations start pouring in. 

Angel Stock Broking, which has also presented a report to clients on the likely scenario, post-elections , says the only concern for the markets may be a Left-led government at the Centre.