 "BSE NSE, Bull market, Indian share market")
The stock market has gained on an average of about three per cent on the day of exit polls in the last three elections.
It has declined nearly two per cent on an average when results are declared.
The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) was leading in 290 seats compared to 235 seats by the Indian National Developmental Inclusive Alliance (INDIA) as of 7 pm.
The exit polls had forecast that the NDA would secure 381 seats based on median estimates. This is an overestimation of 91 seats compared to the evening trends. For the INDIA bloc, the prediction was 132 seats.
With the NDA struggling to reach the 2019 mark, a Business Standard analysis shows that exit polls have been increasingly off the mark in terms of seats.
The data looks at the median of exit polls and compares it with the actual results.
More From This Section
In the 2019 general elections, exit polls underestimated the NDA’s win by 50 seats. The United Progressive Alliance (UPA) won 93 seats compared to a prediction of 124.
In 2014, exit polls underestimated 61 NDA seats and overestimated 34 UPA seats. The divergence has widened in the latest elections.
The markets reacted quickly to the early election trends this year. The preliminary results triggered a decline of 5.7 per cent in the Sensex, marking the largest one-day drop on a results day since 2004.
On May 23, 2019 (results day), the benchmark Sensex fell by 0.8 per cent.
The last time there was gain on results day was in 2014. The gain was less than one per cent.
However, on the day of exit polls, there was enthusiasm as predictions of a third term for Prime Minister Narendra Modi led to a 3.4 per cent increase in the Sensex on June 3.
Similarly, in 2019, the Sensex rose by 3.8 per cent when exit polls suggested a second term for the Prime Minister.
In three of the last five elections, result days saw worse market performance than the days when exit polls were announced.
