Markets’ worst post-election run since 2004

Indian bourses have witnessed their worst post-election performance since the 2004 general election, on the back of weak economic fundamentals.

According to a DH analysis of data sourced from the Bombay Stock Exchange, the benchmark index of BSE, the 30-share Sensex has grown by a mere 1.9% during the 30 trading sessions since the day results were announced on May 23 this year, giving incumbent prime minister Narendra Modi an overwhelming majority.

In contrast, after the 2014 general election, the index grew by a healthy 8% during a similar period. Post-2009 elections, when the country voted to continue with the United Progressive Alliance government headed by Manmohan Singh, markets shot up by a whopping 22.5% in little over a month's time. However, in 2004, when Atal Bihari Vajpayee led National Democratic Alliance (NDA) led government had ceded power to UPA, BSE Sensex went down by 9.1%, owing to policy uncertainty.

Experts attribute this phenomenon to weak macro-indicators in the economy. "The economy is slowing down (Nominal GDP numbers) and there is global uncertainty. Plus oil prices are high and generally, investors are in a risk-off mode," said Anubhav Shrivastava, Partner and Senior Fund Manager at Infinity Alternatives.

The country, which lost the "fastest growing economy" tag immediately after the elections results, has witnessed its GDP growth slip to a 20-quarter low of 5.8% in the last quarter of the previous financial year, on the back of subdued consumption and front-loading of expenditure by the government. This, coupled with growing joblessness in the country, which touched a 45-year high, has sent the economy into mild funk. Given the weak indicators, there doesn't seem to be much hope of revival in the first half of the financial year 2019-20.

Similarly, the broader BSE index -- All Caps -- grew by a mere 1.6% post-2019 election results, compared with 12.7% in 2014 and 26.9% in 2009.

BSE AllCap index is a broad index covering more than 95% of the total market capitalisation and comprises more than 700 stocks that are listed on the BSE.

During the period, the Indian indices have underperformed the global indices as well. The Morgan Stanley Capital International's World Index, during the same period, has grown by 4.1%, 220 basis points more than BSE Sensex and 250 basis points more than the BSE All Caps.