IMPACT OF THE ELECTION 2019 ON STOCK MARKET

Posted by Epic research on March 12th, 2019

Every investor thinks about the Lok-Sabha election in 2019. But why? Why investors are worried about the results of the election? What is the impact of the election on the stock market? Why everyone who associates with the stock market says that the election 2019 is a key trigger of the stock market? There are a lot more answers to find, right? So let's come to explore these.

Firstly, Let's start with the definition of the stock market, for the one who is not familiar with this term. What stock market actually is? “Stock market is actually a platform for exchanging of financial assets by buyers and sellers. Every company (Viz. Epic Research) needs a huge amount of money to grow its business. Stock market allows companies to sell their shares to the public figure.” Is it quite tough to understand? OK fine. Let's take an example that you are an owner of the company ABC, and to grow your company you need a huge amount of capital, in this situation what are you going to do? Either you can arrange that amount from your friends or family member or you can sell your company shares to the public figure. The people who purchase your company shares are the investors who invest their money in your company, and the platform that you use for these exchanges is the stock market.

If you found this topic interesting and you are really curious to know about this then definitely a question arises in your mind is that Why investors find it wealthy to invest in shares? Isn't it? What do you think about it? What it makes someone invest their money? In my point of view or maybe in yours too the return on that money makes the one invest their money. Perhaps, Banks also provide a return on your savings but the return is too less 3.5-4%. So if your money makes you possible to earn more money obviously you can invest it, right?

If you are an investor you want to know about the company in which you are going to invest just because the shares are completely based on the company even its price depends on the supply and demand of the stock. Then, why investors think about the elections? Why election matters for the investors? Is there any relation between the stock market and elections? Of course yes, there is a relation between the election and the stock market. So if the election and stock market related then how? And the answer is the stocks of any company are the parts of finance and economics. Every company that is either national or international have to follow the norms that are created by the government of the country. Every company has to follow the policies that are made by the finance and economic department of the government. When we talk about the upcoming election, after the election the government may be going to change, then will definitely the ministers of the finance and economic department change, and the result is changed in the policies and economic decisions. Share prices based on these economic decisions and this is the only relation between the election and the stock market. These economic decisions are favorable for the company or not will decide the price of the shares and industry growth.

Suppose you are an investor and want to invest in a company named XYZ, What is the first step you take in. You are analyzing the company past statement, how a company performed in the last few years. And then you are performing a fundamental and technical analysis of the stock market and so on. Is it sufficient for you to decide that you have to invest in it or not? Maybe for you it is sufficient, and you are not completely wrong but there are some more factors keep in mind while taking the decision. Obviously, you invest money to gain not to lose, so it is must for you to investigate mini to mini factors that able to do a drastic change in returns. If we talk about the current situations, our present government made changes before policies. The respected government introduced GST. They made changes in taxation, export, and other financial policies. So these policies definitely impact on the performance of the company and hence you also taking care of these too.

Let's see the table inserted below that contains the figures of the Sensex in the period of the past four governments.

It is easy for you to understand how the government impact on the market?

The one & only and the most important reason that the investors are thinking about the election is that the upcoming government formulate the policies and economics decision and these will impact on the company growth.

In conclusion, the company growth is mapped by the election. Whether it is expected that the upcoming election will boom the market, but situations may get change. That is why as an investor you have to analyze the situations. If you are a short term investor you have to focus on the market news, sector news etc. And if you are a long term investor you have to perform fundamental and news analysis. Your years of experience will be helpful to you in these analyses.

Author's Bio:

I am a financial analyst in Epic Research. I like to learn and write about the stock market. I started to write articles on the stock market. I hope that my article is helpful for you and is interesting.