An Empirical Study on Impact of Political Events on Stock Market: Evidence from Recent Trends in India

Abstract

The present study attempts to examine and validate the impact on stock markets due to political events such as change in government and/or socio-economic policies. The study has been done by bifurcating data (CNX Nifty Index) into two phases (i.e.. Pre and Post Election Phases) and comparing it on Year-on-Year (YOY) basis. The various statistical techniques are applied to analyze the dataset and to refine data to information. The results show that the investors have more reacted out of rational expectation of anticipated economic drive. The indices show that market has reacted to almost every new piece of information; however some seasonal anomalies remain the exception. It is evident from the results obtained that the market behaves to some extent in compliance with semi-strong form efficient arguments.