Market Reactions to the 2024 Lok Sabha Election: Analysing Nifty 100 Volatility and Trends Pre- and Post-Election

Nasika Lakshmi

Abstract

The Nifty 100 Index, part of the National Stock Exchange of India (NSE), represents the top 100 large capitalization companies listed on the exchange. It includes the Nifty 50 stocks and another 50 large cap stocks, covering various sectors of the Indian economy. The index aims to provide investors with a benchmark that measures the market performance within the economic environment in India and the investment opportunities that exists. The 2024 Lok Sabha election results created significant turbulence in the Indian stock market, deviating sharply from exit poll predictions of a landslide victory for the NDA. However, preliminary trends suggested a very stiff competition between the NDA and the I. N. D. I. A. alliance. The study seeks to investigate the impact of the election outcomes on the performance of the Nifty 100 index in the period of the election. This paper helps to fill the existing gap in the literature regarding the relationship between political events and stock market activity in India, and the implications of electoral uncertainty for stock market performance. The findings of the study reveal enhanced volatility and significant fluctuations in the Nifty 100 index both before and after the election, enhancing the market sensitivity to political developments. The study contributes to the understanding of the interplay between political events and stock market dynamics in India, offering insights for investors and policymakers regarding market behaviour in response to electoral uncertainty. The study highlights the necessity for strategic planning and risk management for market participants in politically volatile periods.