Chris Wood, the global head of equity strategy at Jefferies LLC, suggests that if Prime Minister Narendra Modi's party (BJP)doesn't secure power in the upcoming national elections, Indian equity markets may witness a significant decline.
Drawing parallels to the 2004 surprise defeat, Wood speculates a potential 25% or more correction in the market. He acknowledges the irreversible reforms initiated by the current government but anticipates a substantial adjustment.
Despite this, he expresses confidence in India's growth prospects, especially in contrast to challenges faced by China. In 2004, a similar electoral upset led to a 20% drop, which partially recovered after policy assurances from the new coalition government.