Indian stock markets react differently to different types of events. Broadly, there are two categories:Unique Events – one-time shocks
(Harshad Mehta Scam, Dot-com Crash, Global Financial Crisis, COVID-19, War Situations)

Repeat Events – predictable, recurring events
(General Elections every 5 years)

Now that unique-event patterns were understood earlier, the transcript moves into repeat events, especially elections.

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1. Elections and Stock Market Behavior

General Elections happen every 5 years. The market’s reaction is not about the party—it reacts to two things:

✓ Market Loves

1. Political Stability
2. Economic Reforms

✗ Market Hates

1. Political Instability
2. Policy Uncertainty

These two simple principles explain all major election-related movements since 1991.

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1991 Elections – Start of LPG Reforms

What happened?

• Congress won
• India began LPG reforms (Liberalization, Privatization, Globalization) for the first time
• Foreign investment started entering
• Economy opened up

Market Reaction

➡ Massive bull run from 1991–92
➡ Why? Reforms, not the party

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1995–1999: Instability = Sideways Market

What happened?

• India had three different Prime Ministers in a short span
• Coalition governments
• Asian Financial Crisis also occurred

Market Reaction

Market moved sideways for ~4 years
(roughly 2800 → 4000 range)

Why?

➡ No policy continuity
➡ Market hates instability
➡ No confidence → no major rally

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1999 Elections – NDA Comes to Power

What happened?

• NDA came into power
• First non-Congress government completing a full term
• Market liked stability + expectations of new reforms

Market Reaction

➡ Sharp rally from ~2800 to ~6000 in one year

But then…
➡ Dot-com bubble burst globally → major crash

Lesson:
Global events can overshadow elections.

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2004 Elections – Surprise Fall

What happened?

• Congress unexpectedly returned to power
• Market assumed reforms may slow
• Lack of clarity → panic selling

Market Reaction

➡ Market fell 15% in a single week (weekly candle)
➡ But confidence was restored quickly
➡ Rally resumed soon after

Why?

➡ Reforms continued → market liked it

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2009 Elections – Big Gap-Up

What happened?

• Congress came back with majority
• Their strong reform record from 2004–2009 created confidence
• Market gave a huge thumbs-up

Market Reaction

➡ Market saw a record 17% gap-up in one day
➡ Very rare; shows strong approval

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2014 Elections – “Achhe Din” & Reform Expectations

What happened?

• NDA (Modi) came with full majority
• Campaign strongly focused on reforms + stability

Market Reaction

➡ Rally from ~20,000 to ~30,000 in barely 1–1.5 years
➡ Market priced in future reforms

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2019 Elections – Even Bigger Majority

What happened?

NDA got an even stronger mandate

Market interpreted it as:
✔ High stability
✔ Faster reforms

Market Reaction

➡ Sharp rally from ~36,000 to ~42,000 in one year
➡ Soon after: COVID crash (covered earlier)

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Key Lessons from 30 Years of Elections

✔ Market Loves:

• Stability
• Consistent policies
• Reform-focused governments

✗ Market Hates:

• Coalition chaos
• Frequent PM changes
• Policy paralysis

Most important:

Market does NOT care about the party.
It cares about policy.

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2. Impact of War Situations on the Market

Now the transcript shifts to war events such as the Russia–Ukraine crisis.

The instructor emphasises:

DO NOT panic.

DO NOT buy tiny dips.
Wait for meaningful corrections.**

To support this, two global research studies were summarized:

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Study 1: Truist Advisory Services (12 War Events)

• They analysed 12 war/geopolitical events
• In 9 out of 12 cases, the S&P 500 was higher after 1 year
• Average gain: 8.6%

Conclusion:

➡ Most war-driven falls recover within ONE year

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Study 2: CFRA Research (24 War Events)

• Studied 24 major geopolitical crises since WWII
• Market fell 5.5% on average from top to bottom
• Took 24 days to reach bottom
• Recovered in 28 days (≈ 1 month)

Conclusion:

➡ Geopolitical events cause short-lived corrections
➡ Recovery is fast (1–4 weeks)

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Big Takeaway: War = Short-Term, Not Structural

• Wars create fear and uncertainty
• But they do not destroy economies
• Nuclear war unlikely → everyone knows consequences
• Therefore recovery is almost guaranteed

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3. Practical Investment Strategy During War

❌ Don’t buy every 1–2% dip

This is not a small volatility event.

✔ Buy only on major cuts

Examples:

• 5% fall
• 7% fall
• 10% fall

✔ Invest slowly

Example:
If you want to invest ₹10 lakh,
put only ~20% initially,
and add more only if deeper cuts come.

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Final Summary

What markets like:

• Stability
• Reforms
• Predictability

What markets hate:

• Chaos
• Policy uncertainty
• Unexpected governance changes

War & Crashes:

• Sharp but short
• Recovery within 1 month to 1 year
• Buy big dips, not tiny dips

Historical Conclusion (30 years):

“No matter how big the crash,
the stock market always recovers.”