Markets Could Fall 25% If PM Narendra Modi's BJP Loses 2024 Election: Jefferies

The future of India’s equity markets may take a hit if the ruling Bharatiya Janata Party (BJP) fails to retain power in the upcoming national elections, warns Chris Wood, Global Head of Equity Strategy at Jefferies LLC.

According to a Bloomberg report, Wood stated at an industry event in Mumbai that a surprise defeat for the BJP, akin to the unexpected loss in the 2004 elections, could trigger a 25% correction in the equity markets, if not more.

Wood asserts that while the government’s implemented reforms like the ambitious output-linked incentive programs will not be reversed, a significant correction is inevitable. However, he remains optimistic about the market’s potential to recover, citing its inherent momentum.

The equity strategist drew parallels to the 2004 scenario where the Indian stock markets plunged roughly by 20% in two days owing to a shock defeat for the BJP. The market managed to recover some of its losses after the then newly-elected Congress-led coalition government reassured the country and markets, promising to continue policies aimed at opening up the South Asian economy.

Despite the potential for a market correction, Wood remains bullish about India’s growth prospects. He said, “India is the best growth story in the world going forward and most particularly in Asia and obviously the problems in China have further cemented that view.”

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Posted In: EquitiesGovernmentOpinionMarketsChris WoodJefferies