Throughout the Indian elections held over the past several weeks, “more than 100 million voters in five states across India went to the polls in November and December,” according to Time. Analysts are watching closely to see what the long-term impact of those election results are likely to have on the market. Economic Times reminds that “Dalal Street is known for knee-jerk reactions to election outcomes.” Early indicators show that markets could experience some momentary volatility. Although the elections were conducted over many weeks, results weren’t released until December 12th. As of December 11th, the equity indices had already gone down about two percent in anticipation of those results.
Analysts believe the early dip was on fears that the party currently in the majority was set to experience huge losses as a result of the election. That turned out to be the case, as the party of India’s Prime Minister, Narendra Modi, the Bharatiya Janata Party or BJP, lost about 100 seats in the election. That may spell bad news for Modi himself as he looks ahead to the national election occurring in 2019. The recent elections were held in Rajasthan, Madhya Pradesh, Mizoram, Chhattisgarh and Telangana and are widely regarded as being the semifinals before nationwide Indian elections.
For now, predictions hold that the Indian stock market will probably continue to experience volatility until the general elections are held in 2019. Modi swept to victory as the new Prime Minister four years ago but may not face a very tough road ahead to command such an impressive result the second time around. Many positive indicators are influencing the market, however, including trends in oil and corporate gains. There will likely be able to offset negative market sentiment because of the unforeseen election results as well as any market ripples that occur. Another coming event those positive indicators can help moderate is the pending release from the Fed in the United States of interest rate changes.
Investors concerned about how the markets may treat their funds in the coming months can choose to diversify into other investment vehicles, such as the NRIs recommended by FinanceGlad for those interested in fixed deposit interest rates to secure their investments. The forex and cryptocurrency markets are also a viable alternative to D-Street for Indian investors hoping to avoid continuing volatility and how it may impact their earnings potential.