Indian markets jumped 11 percent one month after the June 4 election results, driven by a robust rally fueled by renewed foreign investor interest in local stocks.
This marks the strongest post-election surge since May 2019 and May 2014. In May 2019, markets saw a slight dip of 0.1 percent one month after the elections, while in May 2014, they surged by 5.8 percent. The most significant gain was observed in May 2009, with markets soaring approximately 22 percent one month after the election results.
India's benchmark Sensex breached the 80,000 mark for the first time, setting a new record high on July 4, while the Nifty also achieved a fresh lifetime high by closing above the 24,300 mark. Following the election, both the BSE midcap and smallcap indices surged significantly, with gains of 15.4 percent and 19.6 percent respectively, one month after the event.
The Sensex surged from 70,000 to 80,000 in just 139 trading sessions, marking its fastest-ever 10,000-point climb. The index had surpassed 70,000 on December 11, 2023. Interestingly, it took a little over five years for the Sensex to double from 40,000 to 80,000. In contrast, it took 14 years to reach 40,000 from 10,000 initially.
Sunil Subramaniam, a seasoned market expert and former Managing Director of Sundaram Mutual Fund, predicts that the Sensex could reach 90,000 by the year's end. He highlights the significant catch-up potential for large-cap shares compared to mid-caps, which are currently trading at record premiums. Subramaniam emphasizes that the return of foreign investments should bolster this upward movement in the market.
In July, market focus will center on key factors such as Union Budget announcements, progress of the Monsoon, inflation expectations, and Q1FY25 earnings. Historically, July has shown a positive trend in 80% of instances over the past two decades. This trend remains consistent even in election years spanning two decades, where budget-related expectations influence market sentiment. On average, July has yielded returns exceeding 2 percent.
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