The low turnout has not only dampened the excitement of the 2024 Sabah elections, but has also hit the animal spirits of investors, especially foreign investors. Foreign portfolio investors withdrew Rs 27,046 crore from Indian markets from April 1 to May 13. Heavy selling from FPIs has hit the Sensex, which has fallen around 2% in the past 30 days.
Similar trends were not observed in the 2014 and 2019 elections. On the contrary, foreign investment has increased and the Sensex has posted positive returns in the last two general elections. In 2014, Sensex returned 3.7% in the 30 days leading up to the fourth phase of elections (April 12, 2014). Meanwhile, in the 2019 election, the return was 2.2% in the 30 days leading up to the fourth phase. 4, i.e. April 29, 2019
According to data from National Securities Depository Limited, foreign investors invested Rs 23,670 crore in April-May 2014 and Rs 29,113 crore in April-May 2019.
Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services , Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, told India Today on May 13. He cited tensions ahead of the Lok Sabha election results as the reason for the market decline.
Foreign institutional investors continue to sell, with fears of a less favorable election result weighing on market sentiment. Motilal Oswal Financial Services said turnout in most seats was lower than in 2019, making investors nervous about the Bharatiya Janata Party’s expected number of seats.
Geopolitical issues are far from the reason for the decline in the Indian stock market as other major markets have posted positive returns during the same period.
Hong Kong’s Hang Seng returned 15.2% last month, while Britain’s FTSE 100 returned 6%. The US Dow Jones yielded 4.7%, Germany’s DAX yielded 4.1%, China’s Shanghai Stock Exchange yielded 3% and the Sensex fell 2%.
While uncertainty over the 2024 Indian parliamentary elections is impacting markets, experts also believe that if the BJP forms the government, it will once again attract investors, irrespective of the number of seats the party wins. I believe it will work.
“Domestic stock markets have been volatile due to concerns over the ruling government’s election prospects. Initially, market expectations were for an easy victory for the Bharatiya Janata Party, but any downside risks to this could lead to short-term It could lead to a market correction,” Madhavi Arora, chief economist at MK Global Financial Services, told India Today.
Arora explained that current market trends reflect caution rather than conviction among market participants, and it is also premature to extrapolate overall poll results from turnout data alone. “Markets will remain volatile until the June 4 election results,” he added.
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