Of the many well known cycles in the market, one such cycle is the Presidential Cycle. This is applicable only to United States.
Quote about it from Investopedia:
A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a new U.S. president. According to this theory, after the first year, the market improves until the cycle begins again with the next presidential election.
While India follows the West Minister style of governance and hence we should maybe just replace the President with the Prime Minister, it does not work since there is not much of a fixed tenure either of the Prime Minister or the election themselves.
While our President has a fixed tenure and almost all of them have lasted their time, owning to he not being the decision maker as the US President is, there is not much of an influence he can create on the economy.
But I felt it would be interesting to analyze how the markets have behaved during the tenure of various Presidents starting from Giani Zail Singh and here are the results,
Average Performance of the market during the 1st year of the President Term is the lowest with Year 2 and Year 3 competing head on head.
The biggest gain came in the 3rd Year of Zail Singh when Sensex doubled. K R Narayan on the other hand saw 4 of his 5 years Sensex ending in Red.
And finally, percentage returns of Sensex during their respective terms.
The first year of Pranab Mukherjee saw a return of 12%. With 2nd being positive across all Presidents, shall we see a continuation of the ongoing bull rally?
