Exit Poll Prediction – 2024 And Banking Stock Response – An Event Study Approach

Abstract

Generally political events affect stock market returns significant, since it is closely connected with economic policies affairs. In particular, the results of general elections influence the market returns, since the new government may have different economic policies and if the existing government continues similar economic policies may be expected to be sustained. But, in India, the survey organizations and news agencies are allowed to make a survey and reveal its results of exit poll prediction, this prediction may also hit the market significantly. In this context, the authors analysed the impact of exit poll prediction of Lok Saba Election of India in 2024 on banking stocks listed in BSE. for this purpose, The authors selected a total of 27 banking stocks listed in BSE including 12 public and 15 private sector banks. The researchers framed an event window of 41 days and estimation window of 150 days. A standard event study methodology was used for the analysis. The study found that the event had a significant and immediate impact on banking stocks listed on the BSE. The presence of statistically significant negative AAR on the event day indicates that investors reacted cautiously to the exit poll information, leading to a short-term decline in banking stock prices. The CAAR results further show that this event had a short-lived persistent effect on banking stocks in the following week. It is concluded that the findings confirm that exit poll predictions carried substantial informational content, influenced investor sentiment sharply in the short run, and were quickly reflected in stock prices, thereby supporting the semi-strong form of market efficiency.