No significant election impact on equity markets; Nifty to hit 30,000-35,000 by 2027: FidelFolio

The 2024 general election outcome would not have any major long-term effect on the equity markets, according to equity advisory firm FidelFolio. In its report titled ‘Deciphering Market Trends: Navigating Pre-Election Dynamics and Global Turbulence,’ FideFolio stated that the Nifty 50 is expected to be between 30,000 and 35,000 points in 3 years.

According to the equity advisory firm, apart from a few exceptions the Nifty indices have often demonstrated an upward trajectory around elections. Despite the difficulties and volatility during the previous 30 years, Nifty has provided a CAGR return of 13% when examining market returns.

Despite the weakest coalition government in office from 1996 to 1998, the index managed to eke slightly positive returns following a period of significant turbulence.

Looking ahead to the 2024 election there’s a consensus that the current government will retain power. While this may provide stability and continuity, expectations for major shifts in government policies or thrust areas are minuscule.

“As the country gears up for another crucial election, investors are eyeing the market’s performance, wondering whether it will witness a pre-election rally or correction. However, the global scenario paints a contrasting picture. The growing turbulence in the Middle East, the Russia-Ukraine conflict, and the poor economic indicators from the major economies could impact the Indian stock market. Subsequently, the customary 3-6-month post-election review may not be as applicable this time around since global issues could soon eclipse the consequences of the election outcomes,” said Kislay Upadhyay, smallcase manager & Founder of FidelFolio.Expressing optimism about how polls will impact his portfolio, Upadhyay added, “We firmly believe that this time quality stocks with strong fundamentals (companies with high capital efficiency and growth) will be attractive and will gain market share. In the recent past, quality stocks have not performed and will perform now.During the past two elections, it was observed that the performance within various sectors differed significantly. While Nifty Healthcare saw a substantial uptrend (20% and 42% from 2% and 8% after 3 and 6 months), Nifty Energy saw a negative trend (0% and -1% from 27% and 25%).

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