Impact of french elections on Indian stock market

 

Now, with the first part of the French elections done, we have two candidates standing for the final poll – Emmanuel Macron and Marine le Pen. Though the final decision of who grabs the presidential seat will be taken on 07.May.2017, we already have debates and discussions about who’s going to win and what’s going to happen next.

France, being one of the world’s most powerful economies, the election results are expected to affect not only the country alone but the repercussions are going to be evident on a global level.

Talking of French election impact on India, following points quite summarise our expectations:

  • It is expected that the elections are going to trigger a volatile impact in the economy that is going to impact the stock markets for weeks.
  • Many analysts are of the view that the reactions, though no clear, but are going to be extreme. Either the result would be a sharp fall in the stock prices, or probably a sudden surge in the markets.
  • It is also said that the elections might even lead to the currency value shaking, thus, weakening the India rupee even more (in case of Macron win- Euro might become stronger!)
  • “We don’t have a happy market solution”, said Marc Chandler, head of the Foreign exchange strategy, US.
  • Now think, if such a huge economy as USA is considering the probability of loss, what can we think about India?
  • Another expected impact of the elections is a decrease in investments in India, owing to the fact the new government plans to increase the yield that it offers on its 10-year government bonds.
  • Also to be noted is the fact that many financial analysts, before we actually began with the elections, said that the current combination of results that we have i.e. a tuck between Emmanuel Macron and Marine Le Pen is the worst one possible and is only going to impact the markets adversely, especially the developing nations, such as India.
  • Though, post the win of Macron in the first round of the elections, the French markets jumped like anything, the surge is not going to continue for long. Since, the political divide in the country continues to become a bigger mess, some analysts also say that the new President won’t be able to change much.
  • On the other hand, some analysts are of the view that India is still developing extremely strong relationships with the country and since India still has a long way to go, there’s not much to worry about.
  • Further, in case of Le Pen winning the elections, as her policies are more in direction of French Exit from Eurozone (which means that EURO as a currency will fall and Indian currency will gain against EURO)

So, lets see how things evolve. But for sure, markets will be volatile in the coming week!

 

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  • Hi Arushi, nice post… Well elections has already been over in France and Macron has won the election but there was hardly any effect of that in Indian market.