Lok Sabha polls 2019: Why do elections tend to influence the stock markets?

The market is always looking for a courageous leader who is willing to risk short-term popularity for long-term economic benefits, says Angel Broking's Jyoti Roy

Prior to any major election there is a lot of noise regarding the impact of the election outcome on stock markets. While it is generally perceived that elections do not matter in the long run, the truth is a bit more complicated than that. Interestingly, as the graphic below illustrates, the general elections on the last three occasions have been extremely positive for the markets.

Data Source: BSE

However, while analyzing returns post elections, one needs to keep in mind economic conditions as well as valuations. For