Analysis: How Sensex & Dow Jones react to US presidential polls



Riken Mehta
Moneycontrol.com


Judging from the initial reaction of benchmark indices, President Barack Obama’s re-election appears to have struck the right chord among investors in India. But historical trends show that the Indian stock market has been largely indifferent to the outcome of Presidential polls in the US, except in 1996.


Interestingly, four out of five times in the past, the Sensex and the Dow Jones have moved in opposite directions after the Presidential elections threw up a winner. The Sensex surged 3.37% when Bill Clinton emerged victorious in 1992, but Dow Jones lost 0.90%. The US index gained 1.6% in 1996, when Clinton was re-elected as the the President. However, Sensex lost marginally after Clinton’s re-election. Similarly in 2008, when Obama became the 44th US President, investors in India appeared more pleased, going by the upmove in the Sensex.


Refer to the table below to check out how Indian and the US markets reacted after US presidential polls.
Year US Presidential  Political  Electoral  US Presidential Political Electoral Dow Jones Sensex
Candidate Winner Party Votes Won Candidate Loser Party Votes Won
04-Nov-08


Barack Obama (44th Pres) Democratic
365


John McCain Republican
173


-5.04% 2.84%
02-Nov-04


George W. Bush (43rd) Republican
286


John Kerry Democratic
251


1.01% 0.87%
07-Nov-00


George W. Bush (43rd) Republican
271


Al Gore Democratic
266


-0.41% 0.59%
05-Nov-96


Bill Clinton (42nd) Democratic
379


Bob Dole Republican
159


1.58% -0.96%
03-Nov-92


Bill Clinton (42nd) Democratic
370


George H.W. Bush Republican
168


-0.90% 3.37%
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