International Journal on Science and Technology

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Volume 16 Issue 4
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Political Events and Financial Markets: A Study of Election Impact on NSE and BSE

Author(s) Ms. Utakarsha Baish
Country India
Abstract Elections are among the most influential political events that shape the dynamics of financial markets. In India, where democratic processes are deeply embedded and stock markets such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are highly responsive, elections present a unique opportunity to study the relationship between politics and finance. This study investigates the impact of general elections on stock market returns and volatility by comparing pre-election and post-election periods. Using an independent t-test, the results reveal that stock returns show significant changes after elections, indicating that political outcomes strongly influence market performance. An F-test further demonstrates that volatility rises substantially in the post-election phase, suggesting heightened investor uncertainty. Additionally, ANOVA results confirm that short-term volatility within 10 days after elections is considerably higher compared to 20-day and 30-day periods, before gradually stabilizing. These findings highlight that election-related shocks are sharp but temporary, with markets absorbing uncertainty over time. The study contributes to the existing literature by providing empirical evidence from the Indian context, while also offering practical insights for investors, policymakers, and academics. It emphasizes the importance of considering political risk in financial decision-making and underlines how democratic events influence not only governance but also economic behavior through stock market reactions.
Keywords Elections, Stock Market Returns, Volatility, NSE & BSE
Field Business Administration
Published In Volume 16, Issue 4, October-December 2025
Published On 2025-10-07
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