Impact of Election Result on the Stock Market, an Analysis of BSE (SENSEX) and NSE (NIFTY) Indexes

13 Pages Posted: 9 Feb 2020

See all articles by Ved Prakash

Ved Prakash

Central University of Karnataka

Dr. K. Padmasree

Central university of karnataka

Date Written: September 15, 2019

Abstract

This paper is aimed to analyze the impact of election result announcement on NSE (Nifty) and BSE (Sensex) index. To measure the effect of daily average returns and volatility during a period of three categories before thirty days, fifteen days, and seven days and after thirty days, fifteen days, and seven days of the announcement of the election result. Data has been collected for the past five election periods from 1999, 2004, 2009, 2014 and 2019. Statistical tools used for the study include average returns of the data, paired T-test, variance and correlation coefficient. The study found that impact of election results is noticed in the short term and gradually declines in the medium and diminishes in the long-term period. This study concludes that there is no significant relationship in the announcement of election results and performance of the stock market. Stock Market reacts abnormally to the information and brings anomaly for a short period and corrects itself in subsequent days. The outcome of the study suggests Investors to be extra cautious while investing during this time frame and can benefit in the short term by using short term strategy for investments.

Keywords: Anomaly, General Elections, Investment, Volatility, Sensex, Nifty

Suggested Citation

Prakash, Ved and Padmasree, Dr. K., Impact of Election Result on the Stock Market, an Analysis of BSE (SENSEX) and NSE (NIFTY) Indexes (September 15, 2019). Available at SSRN: https://ssrn.com/abstract=3520090 or http://dx.doi.org/10.2139/ssrn.3520090

Ved Prakash (Contact Author)

Central University of Karnataka ( email )

Karnataka
India

Dr. K. Padmasree

Central university of karnataka ( email )

Karnataka
India

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