Elections 2024 & Stock Markets: ‘Stop predicting, start…’ says Deepak Shenoy of Capitalmind

Investors should not try to predict the course of the market. Instead, they should respond and react accordingly, says market expert Deepak Shenoy.

Sharing his views on X (formerly Twitter), Shenoy, the founder and CEO of Capitalmind, a SEBI-registered Portfolio Management Service (PMS), said, "Everybody is trying to predict the market's response if the election results are X or Y. If the market falls, should I take off my money right now? I don't know the answers. Therefore, I choose to react or respond instead of trying to predict what the market and elections will do."

The Indian stock market has been volatile for the last few weeks ahead of the Lok Sabha election 2024 outcome. Even though the market is still fairly hopeful that the BJP-led NDA will retain power after the election, there is palpable nervousness among market participants due to the low voter turnout.

Also Read: Will the Indian stock market continue its upward momentum this week? Here's what experts say

Shenoy underscored that the stock markets have a strange way of reacting to many situations.

He gave the example of Brexit when the market fell 6 per cent that day but recovered quickly in the next few days.

Even after the announcement of demonetisation, the stock market fell for a couple of weeks but bounced back again.

"You can't predict the reactions of the market even though you may predict an event correctly, and this is even more evident in Lok Sabha elections 2024," said Shenoy.

Also Read: How large-cap stocks can offer a buffer against heightened volatility?

Explaining his views further, Shenoy highlighted how the market moved after the 2004 Lok Sabha elections when the Left Parties were in the ruling coalition.

"Any person who looked at markets at that time would have thought that it was the end of the market. And yes, it was the end for the next two months, and the market fell 24 per cent in a couple of days, but within three months, it had recovered back to the pre-election levels and the next three years," said Shenoy.

"With the Communist Parties in power, we saw the market go up more than 200 per cent. That means it went up three times in roughly two and a half or three and a half years. You would have missed it even if you had predicted election results appropriately. You would have predicted that the Left Parties being in power is not good for stock markets. And yet, you would have seen this happening," said Shenoy.

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