Indian Election 2024 Recap and Market Outlook Ahead

Indian Election 2024 Recap and Market Outlook Ahead

The Indian Election 2024 has culminated in a decisive victory for the National Democratic Alliance (NDA), led by Prime Minister Narendra Modi. As the results pour in, it is clear that the NDA has secured a majority and strengthened its foothold across various states, solidifying its mandate for a third consecutive term. This victory is a testament to the continued support for Modi’s leadership and the policies that the NDA has implemented over the past decade. Here’s a full analysis of the Indian election 2024 and what the future holds for the economy and the market. 

2024 Lok Sabha Elections Seats Data

Alliance Seats(Wins+Leads)
Total Seats543
Alliance wise seats data for Lok Sabha Elections 2024

Indian Election Recap: Election Results and NDA’s Triumph

Counting votes has revealed a solid performance by the NDA, with the coalition winning a substantial number of seats in the Lok Sabha. Key states such as Uttar Pradesh, Maharashtra, Madhya Pradesh, and Gujarat have played a pivotal role in this success while Delhi, Uttarakhand, and Himachal Pradesh provided a clear victory for NDA candidates. The Bharatiya Janata Party (BJP), the leading party within the NDA, has retained its dominance while making significant inroads into new territories like Kerala and breaking into South Indian states with a good presence in 2024 Lok Sabha Elections. At the time of publishing NDA was winning/leading across 290 seats with BJP catering to 241 seats. The final tally was undermined by the exit poll data which had predicted over 330-360 seats for the NDA alliance. Despite that, the clear majority win for NDA signals a trust among Indian citizen for the continued governance of PM Modi. 

Also read: Indian General Election Results 2024: Live Coverage and Analysis

Indian Election Recap: Tough Competition from INDIA Bloc

Despite the NDA’s decisive victory, the 2024 elections also highlighted the formidable challenge posed by the INDIA (Indian National Developmental Inclusive Alliance) Bloc. This coalition of opposition parties, including the Indian National Congress, the Aam Aadmi Party, the Samajwadi Party, and several regional players, mounted a vigorous campaign garnering significant support, particularly in states like West Bengal, Tamil Nadu, and Kerala. At the time of publishing INDIA bloc had 235 wins/leads with Congress accounting for 99 and Samajwadi Party accounting for 37 of them. 

What NDA’s Win means for the Indian Economy?

The NDA’s victory signifies a continuation of economic policies aimed at growth and development. The government’s focus on infrastructure, digital transformation, and industrial growth will likely drive economic expansion. With India aiming to emerge as the fourth-largest economy by 2026 surpassing Japan and as the third-largest economy with its GDP crossing $5 Trillion by 2027 surpassing Germany, the next term in office for the government is to execute and capitalize on the momentum built in the last few years. India’s GDP growth rate of 8.2% for FY24 is the highest among all major large economies; showcasing the growth of the economy and the opportunities it will bring for the nation. The continued policies and political stability bodes well for the Indian economic future. 

Also read: India Solidifies Its Position as the Most Preferred Emerging Market: Morgan Stanley

Economic Outlook under Modi 3.0

The NDA’s victory is poised to bring a sense of continuity and stability to the Indian economy. Here’s an analysis of how the economy is expected to evolve under the continued governance of the NDA:

1. Infrastructure Development

  • Infrastructure development has been a cornerstone of the NDA’s agenda, and this is set to continue. The government is expected to invest heavily in roadways, railways, and urban infrastructure. The ambitious Bharatmala and Sagarmala projects will likely see accelerated progress, enhancing connectivity and logistics across the country.

2. Digital Economy and Technology

  • Digital India, a flagship initiative of the Modi government, will remain a key focus area. The push towards a cashless economy, increased internet penetration, and the promotion of digital literacy are expected to further transform the economic landscape. The government’s support for startups and technology-driven enterprises will also play a crucial role in fostering innovation and entrepreneurship.

3. Manufacturing and Industrial Growth

  • The ‘Make in India’ campaign will continue to receive a significant push, aiming to boost domestic manufacturing and reduce dependency on imports. With policies favoring ease of doing business, simplification of regulatory processes, and incentives for foreign investments, India’s industrial sector is poised for substantial growth.

4. Agriculture and Rural Development

  • Agriculture remains the backbone of the Indian economy, and the NDA government is likely to continue its efforts to modernize this sector. Policies aimed at increasing farmers’ incomes, enhancing agricultural productivity, and ensuring better market access for agricultural produce will be prioritized. Initiatives like Pradhan Mantri Fasal Bima Yojana (crop insurance scheme) and Pradhan Mantri Krishi Sinchai Yojana (irrigation scheme) are expected to be expanded.

5. Healthcare and Education

  • The NDA’s focus on healthcare and education will be critical in shaping India’s future. The Ayushman Bharat scheme, which aims to provide health coverage to millions of poor and vulnerable families, will likely see further enhancement. Similarly, initiatives to improve the quality of education, increase enrollment rates, and bridge the skill gap in the workforce will be key priorities.

What does NDA’s Win mean for the Indian Markets? 

While elections can create short-term market volatility as it happened on the day of election results, the key to long-term growth lies in the policies implemented by the government. Continuity in government is generally seen as a positive indicator for the economy.

NDA’s victory in the 2024 elections signals policy continuity, providing a stable and predictable economic environment for investors. Historically, in the six months leading up to elections, market indices often rise as investors adjust their portfolios based on anticipated outcomes. Past election cycles have shown increased average market returns during this period, indicating positive investor sentiment fueled by the prospect of a stable government and potential reformative measures. This upward trend typically extends post-election, as established policies and new governmental frameworks provide clearer direction for market movements.

Historical market performance during Election years
Disclaimer: SBNRI does not intend to predict the actual performance. Past returns does not guarantee future returns. Read all related documents carefully before investing.

Market confidence is expected to remain strong, with the stock markets likely to maintain a positive trajectory under the NDA’s governance. The consistency in economic management and policy implementation will bolster investor sentiment, reflecting increased confidence in the government’s ability to drive economic growth.

For example, the market’s reaction to the 2019 elections was a testament to the confidence in the incumbent government. The Sensex surged by over 1,000 points (around 3%) on the day the results were announced, reflecting investor relief and optimism about policy continuity and economic growth.

Also read: Indian Elections Impact on the Stock Market: Historical Perspective

Why do the Indian Elections Impact the Stock Market?

The stock market’s reaction to elections is largely due to policy changes and political actions taken by parties to secure their positions. Political parties often implement rapid economic stimulation strategies to increase their re-election chances. This pre-election period sees heightened market activity and volatility, which tends to stabilize post-elections, depending on the results and subsequent political stability.

What are the Key Sectors to Watch Post-Election after NDA’s Win?

Here are some of the top sectors to watch post-election after NDA’s win.

Defensive sectors can offer stability during uncertain times.

  1. Healthcare: Initiatives like Modicare and Mohalla Clinics create investment opportunities in India’s healthcare sector. With an aging population, government healthcare spending is expected to increase, especially if the current government is re-elected.
  2. Utilities: India’s renewable energy sector shows strong potential. The “PM Suryodaya Yojana” allocates ₹10,000 crore to solar energy in the 2024 interim budget, highlighting growth prospects. The BJP government’s initiatives, such as HELP and the Pradhan Mantri Urja Ganga project, support increased domestic oil and gas production, enhancing energy security and benefiting gas companies.

Cyclical sectors can offer growth potential, like: 

  1. Infrastructure: With expected government continuity, infrastructure growth is anticipated. Capital expenditure for infrastructure is increased to ₹11.1 trillion for FY 2024-25, which can attract foreign investments, boost trade, and enhance financial stability.
  2. Hospitality and Tourism: Post-election, this sector is poised for growth. In 2022, tourism contributed ₹15.7 trillion to the economy (4.6% of GDP). Government schemes like “Swadesh Darshan” support this sector, making it an attractive investment.
  3. Banking and Financials: This sector remains promising post-election. Banks are crucial for capital allocation and are considered relatively safe investments. With the Current Account Deficit expected to reduce to 1% of GDP and anticipated RBI interest rate cuts, growth prospects are strong.
  4. Real Estate: The residential real estate segment is likely to peak in 2024, reflecting optimism in the market. Sustained economic expansion will enhance India’s appeal to global corporations, boosting the construction sector and employability.
  5. Defense- India’s defense budget has been increasing, with the interim budget allocating over ₹6.21 lakh crore to the Ministry of Defence, a 4.72% increase from FY 2023-24. The government encourages foreign investments in defense, potentially leading to more collaborations and increased FDI.

Additionally, maintaining investments in high-quality large-cap stocks with strong fundamentals can provide stability even during market fluctuations.

Also read: 10 Mutual Funds That Doubled Wealth In 5 Years

Wrapping Up

The NDA’s victory in the Indian Election 2024 marks the beginning of a new chapter of governance under Prime Minister Narendra Modi. With a clear mandate, the government is set to continue its policies aimed at economic growth, infrastructure development, and social welfare. The focus on key areas such as digital economy, renewable energy, and financial inclusion will drive India’s progress in the coming years. As the nation moves forward, the continuity in leadership and policy direction is expected to create a conducive environment for sustained economic development and prosperity.

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Who is the 2024 PM of India?

  • Narendra Modi is on track to serve as India’s Prime Minister for a third consecutive term, with initial results indicating that the Bharatiya Janata Party is leading in 240 seats, and the NDA is ahead in 291 seats.

How many seats does the BJP need to win?

  • To attain a majority in the 543-member lower house of parliament, a party or coalition must secure at least 272 seats. At the time of counting Narendra Modi-led Bharatiya Janata Party(BJP) is leading in 240 seats, and the NDA is ahead in 291 seats.

How many seats are in the NDA in 2024?

  • NDA is leading in 291 seats at the moment with BJP spearheading with 240 among them.

How can investors prepare for the volatility during Indian elections?

  • Investors can prepare by diversifying their portfolios, staying informed about political developments, and understanding historical market reactions to similar events. This helps in mitigating risks and capitalizing on potential opportunities.

What are the long-term trends in the Indian stock market during different political regimes?

  • Long-term trends show that pro-business regimes, like the BJP-led NDA, often result in robust market growth due to economic reforms and liberalization policies. Conversely, periods of policy paralysis and political instability can lead to market stagnation.

How do policy changes post-elections impact the stock market in India?

  • Post-election policy changes can have significant economic impacts. Reforms such as the implementation of the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) have historically boosted investor confidence and market performance.

What should investors focus on during the 2024 Indian general elections?

  • During the 2024 general elections, investors should focus on political developments, potential policy shifts, and historical market trends. Staying informed and understanding the implications of different electoral outcomes can help in making strategic investment decisions.
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