JM Financial expects the Indian market to rally in the run-up to the general elections, which have to be held by May, as data show that the Nifty gained on four occasions in three months leading up to the polls results.
The average upmove was 10.7 percent during the three-month period from middle of February to mid-May when results are normally declared, with the highest 25 percent in 2009. The lowest was 8 percent in 2019. In contrast, the Nifty declined 10 percent in 2004 but recovered from June 2004 onwards.
The Nifty closed negatively in 2004, with a decline of 10 percent, followed by a significant recovery from June 2004 onwards.
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The Bank Nifty index, which holds approximately 38 percent weightage in the benchmark Nifty, also closed positively on all four occasions, with an average upward of 21 percent.
"In 2004, it remained flat, while the highest return of 46 percent was recorded in 2014," the brokerage firm said.
Bank Nifty has outperformed benchmark Nifty on all four occasions, with an average outperformance of 11 percent.
Among individual stocks, analysts found Adani Enterprise to be the top performer in past five election years. The stock gained over 56 percent on an average during the three-month period.
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Other notable performers during the period include Kotak Mahindra Bank, Siemens, Shree Cement, UPL, and IndusInd Bank, which surged between 35 percent and 53 percent on an average.
On the flipside, shares of Hindustan Unilever (HUL) declined the most during three months, down by an average of 7.4 percent.
Divi's Lab, Britannia Industries, Tata Steel, Glenmark Pharma, and HCL Tech were the other top underperformers.
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