Indian stock markets react differently to different types of events. Broadly, there are two categories:
Unique Events – one-time shocks(Harshad Mehta Scam, Dot-com Crash, Global Financial Crisis, COVID-19, War Situations)
(General Elections every 5 years)
Now that unique-event patterns were understood earlier, the transcript moves into repeat events, especially elections.
1. Elections and Stock Market Behavior
General Elections happen every 5 years. The market’s reaction is not about the party—it reacts to two things:
✓ Market Loves
- Political Stability
- Economic Reforms
✗ Market Hates
- Political Instability
- Policy Uncertainty
These two simple principles explain all major election-related movements since 1991.
1991 Elections – Start of LPG Reforms
What happened?
- Congress won
- India began LPG reforms (Liberalization, Privatization, Globalization) for the first time
- Foreign investment started entering
- Economy opened up
Market Reaction
➡ Massive bull run from 1991–92
➡ Why? Reforms, not the party
1995–1999: Instability = Sideways Market
What happened?
- India had three different Prime Ministers in a short span
- Coalition governments
- Asian Financial Crisis also occurred
Market Reaction
Market moved sideways for ~4 years(roughly 2800 → 4000 range)
Why?
➡ No policy continuity
➡ Market hates instability
➡ No confidence → no major rally
1999 Elections – NDA Comes to Power
What happened?
- NDA came into power
- First non-Congress government completing a full term
- Market liked stability + expectations of new reforms
Market Reaction
➡ Sharp rally from ~2800 to ~6000 in one year
But then…
➡ Dot-com bubble burst globally → major crash
Lesson:
Global events can overshadow elections.
2004 Elections – Surprise Fall
What happened?
- Congress unexpectedly returned to power
- Market assumed reforms may slow
- Lack of clarity → panic selling
Market Reaction
➡ Market fell 15% in a single week (weekly candle)
➡ But confidence was restored quickly
➡ Rally resumed soon after
Why?
➡ Reforms continued → market liked it
2009 Elections – Big Gap-Up
What happened?
- Congress came back with majority
- Their strong reform record from 2004–2009 created confidence
- Market gave a huge thumbs-up
Market Reaction
➡ Market saw a record 17% gap-up in one day
➡ Very rare; shows strong approval
2014 Elections – “Achhe Din” & Reform Expectations
What happened?
- NDA (Modi) came with full majority
- Campaign strongly focused on reforms + stability
Market Reaction
➡ Rally from ~20,000 to ~30,000 in barely 1–1.5 years
➡ Market priced in future reforms
2019 Elections – Even Bigger Majority
What happened?
NDA got an even stronger mandate✔ High stability
✔ Faster reforms
Market Reaction
➡ Sharp rally from ~36,000 to ~42,000 in one year
➡ Soon after: COVID crash (covered earlier)
Key Lessons from 30 Years of Elections
✔ Market Loves:
- Stability
- Consistent policies
- Reform-focused governments
✗ Market Hates:
- Coalition chaos
- Frequent PM changes
- Policy paralysis
Most important:
Market does NOT care about the party.
It cares about policy.
2. Impact of War Situations on the Market
Now the transcript shifts to war events such as the Russia–Ukraine crisis.
The instructor emphasises:
DO NOT panic.
DO NOT buy tiny dips.
Wait for meaningful corrections.**
To support this, two global research studies were summarized:
Study 1: Truist Advisory Services (12 War Events)
- They analysed 12 war/geopolitical events
- In 9 out of 12 cases, the S&P 500 was higher after 1 year
- Average gain: 8.6%
Conclusion:
➡ Most war-driven falls recover within ONE year
Study 2: CFRA Research (24 War Events)
- Studied 24 major geopolitical crises since WWII
- Market fell 5.5% on average from top to bottom
- Took 24 days to reach bottom
- Recovered in 28 days (≈ 1 month)
Conclusion:
➡ Geopolitical events cause short-lived corrections
➡ Recovery is fast (1–4 weeks)
Big Takeaway: War = Short-Term, Not Structural
- Wars create fear and uncertainty
- But they do not destroy economies
- Nuclear war unlikely → everyone knows consequences
- Therefore recovery is almost guaranteed
3. Practical Investment Strategy During War
❌ Don’t buy every 1–2% dip
This is not a small volatility event.
✔ Buy only on major cuts
Examples:
- 5% fall
- 7% fall
- 10% fall
✔ Invest slowly
Example:
If you want to invest ₹10 lakh,
put only ~20% initially,
and add more only if deeper cuts come.
Final Summary
What markets like:
- Stability
- Reforms
- Predictability
What markets hate:
- Chaos
- Policy uncertainty
- Unexpected governance changes
War & Crashes:
- Sharp but short
- Recovery within 1 month to 1 year
- Buy big dips, not tiny dips
Historical Conclusion (30 years):
“No matter how big the crash,
the stock market always recovers.”
%20(2).png)
0 Comments