(Bloomberg) — Indian stocks have turned volatile ahead of election results due next week, but if history is any guide the outcome makes little difference to long-term investors.
Most Read from Bloomberg
The S&P BSE Sensex Index gained in the six-month period after voters’ verdict in each of the last five elections, giving a median return of over 11%. While the market has mostly priced in a victory for Prime Minister Narendra Modi’s party, market participants expect his party to better their previous seat tally of 303 seats to extend stock gains.
Read: India’s Equity Rally Hinges on Modi Bettering 303-Seat Tally
The voting comes to an end on June 1 and the final result is expected on June 4. As the process reaches its last leg, a gauge of 30-day implied volatility on the National Stock Exchange Ltd. has more than doubled from a low in April, while stocks touched a new high last week.
The SENSEX Index rose 0.2% on Friday, helping trim monthly losses to about 0.6%.
“There is room for upside if foreign flows, which have been weak this year, improve after elections and volatility declines similar to prior election cycles,” Goldman Sachs analysts wrote in a note.
(Updates with Friday’s market move in the fifth paragraph)
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
