Lok Sabha elections 2024: How a lot Nifty50, Sensex will surge on the outcomes day

The exit polls launched on Saturday indicated that Nationwide Democratic Alliance (NDA) would sweep the not too long ago concluded Lok Sabha Normal Elections and kind the federal government for the third consecutive time. This has resulted within the Indian benchmark indices opening with a large gap-up on Monday and surging to new highs in the course of the day.

Whereas the BSE Sensex gained 2507.47 factors, or 3.39%, to 76,468.78, the broader NSE Nifty50 gained 733.20 factors, or 3.25%, to 23,263.90.25.

However the positive aspects, the buying and selling session was risky on Monday. This pattern will proceed on Tuesday too when the precise election outcomes are out. It will likely be necessary to see whether or not the exit polls figures are matching the precise numbers or not.

Because the announcement of election outcomes are solely hours away, we analysed the previous traits to grasp how the Sensex and Nifty moved on the election end result days. We’ve got taken the final 4 election years, that’s 2004, 2009, 2014 and 2019.

Whereas historic efficiency will not be a assure of the longer term, that is only a examine on how the markets have carried out up to now.

Exception yr

Out of the 4 election years, the yr 2009 is an exception. Firstly, the election outcomes got here on a Saturday. So, there was a one-day hole for the market to react.

The United Progressive Alliance (UPA) profitable for the second consecutive time gave a lift to the markets as they opened on Monday (after the outcomes had been introduced on Saturday). The benchmark indices, the Sensex and Nifty 50, surged and closed over 17 per cent increased on that day.

Marginal closing distinction

Leaving out 2009, within the different three election years, there has not been a lot significance by way of the closing values of the Sensex and Nifty as in comparison with yesterday. 2019 was the one yr when Sensex and Nifty have closed within the pink on the end result day. The indices had been down 0.76 and 0.69 per cent, respectively.

Within the different two years, 2004 and 2014, the indices rose on a median of 0.75 to 0.85 per cent on the end result day.

Intraday volatility

Though there may be not a lot significance by way of the market closing, the end result day have at all times seen a excessive intraday volatility. That’s, the swing between the day’s high and low have been very wild on the outcomes day. On a median, the high-low unfold in Sensex have been a median of 1,000 factors on the end result day. For Nifty, the unfold has been on a median of 450 factors. In comparison with the closing determine on the day earlier than the outcomes, the excessive on end result day within the indices was 4.4 per cent and the low was about 2 per cent.

Within the final two election years, that’s in 2014 and 2019, the benchmark indices have opened with a gap-up. Nifty had opened with a median gap-up of 1.7 per cent (150 factors). Sensex had opened with a median 1.4 per cent gap-up (425 factors).

Attainable vary

Sensex and Nifty closed at 76,468.78 and 23,263.90, respectively on Monday forward of the election outcomes. If the exit polls and actual outcomes are in tandem, then contemplating the above common numbers, Nifty and Sensex can open round 23,650 and 77,500, respectively. The day’s vary will be 74,900 to 79,800 for the Sensex and 22,800 to 24,300 for Nifty. The benchmark indices can shut round 76,600 and 23,300.

Be cautious

If there’s a vital a variation between the exit polls and the precise numbers, then there’s a hazard of the market operating into a giant sell-off. In that case, the assumptions and the vary calculated on the indices ranges above will go fully fallacious. So, extra warning is required.