There has been a lot of volatility in the markets lately and investors might be looking at some option trading strategies that count on high volatility.
If history is anything to go by it is likely that this year will be a positive one for the Indian Financial Markets. According to the General elections from the past 38 years, there have been all but one occasions where the markets failed to give positive returns in the year following the elections. Both the Indira Gandhi led govt. in 1980 (1-year return of 20%) and the Rajiv Gandhi led govt. in 1984 (1-year return of 77%) gave decent 1-year returns. The PV Narasimha Rao govt. in 1991 led the liberalization process and opened up the Indian markets for global investors helping market gain staggering returns (1-year return of 126%). The Vajpayee govt. in 1999 was built amongst a lot of turmoil on the domestic (Kargil conflict) as well as a global front (9/11 Attack in the US) and hence the market reacted in a negative way. The two Manmohan Singh terms also yielded handsome positive 1-year returns of 27% and 18% respectively. The Narendra Modi govt. came to power with a huge majority in 2014 delivering a 1-year return of 11.4%. The Market doesn’t like uncertainty so historically after the results it reacts in a positive way instilling confidence in the investors.
So all in all, the past data suggests that there’s always been an uptick in the market sentiment post the General Elections results, no matter the party that comes to power.
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