While sentiment is the stock market's main force that push and pull the market level, elections play a key role in milking the sentiments. Both are driven by sentiments of people.
Investors in share markets are always worried about the policy of the party, which is going to form the government after an election. If they are investors friendly and there is a chance of steady and stable government, then the stock market will see bullish trend. On the other hand if their policies are not popular among the investors and theirs might be a minority government, then one can expect a bearish market.
ON 15th May 2018, when the Karnataka assembly election result was announced, BJP was inching towards the half mark to emerge as a single majority party to form the government , the sentiments on Sensex was tremendous. Earlier on that day the BSE bench mark index, Sensex was up by 495 points . But at the end of the day when BJP failed to get 112 seats which is half way mark to form the government, the Sensex closed at 35,543, 12 points lower than the previous day.
After the political dramas , Mr. Kumaraswamy is going to sworn in as the next Chief Minister of Karnataka with the help of Congress party. Indian Silicon valley and Investors are watching him closely. If his government is steady and the infrastructures like current cuts, pot holes in roads in Karnataka are taken care of, then the sensex may see a bullish market. If the horse trading and uncertainty continues even after the formation of government, then the investors in the stock market will have a big problem. For the stock market investors, Year 2018 is not going to be like 2017 due to upcoming polls in many states and General election in 2019. So we should be careful and cautious about our investment.