The benchmark BSE Sensex has gained in the month before elections in each of the previous six elections, with the biggest advance coming in 2009 when the Congress-led United Progressive Alliance won a majority.

The gains in the run-up to elections can be explained by a mix of expectations for policy reforms and election spending, according to traders.

Traders expect especially strong gains this year as solid foreign investor flows, a more stable rupee on the back of a narrowing current account deficit are more than offsetting global uncertainties such as US Federal Reserve's tapering of its monthly bond buying.

Still, although markets widely expect a victory for the main opposition party BJP, whether it can clinch a majority could be the joker in the pack, although similar uncertainties about outcomes in previous elections have not prevented gains.

"A pre-election rally is definitely underway. Flows, positioning, macro are all pointing towards its extension in the coming months," said G Chokkalingam, founder of Equinomics, a research and fund advisory company.


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