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Renowned market strategist Chris Wood, who holds the position of Global Head of Equity Strategy at Jefferies LLC, which is an American multinational independent investment bank and financial services company, delivered a notable forecast at the Business Standard BFSI Summit 2023.
So, how credible is this prediction? We explain.
What did he say?
If the ruling Bharatiya Janata Party faces a surprise defeat in the national polls, as happened in 2004, “then I would expect a 25% correction if not more,” Wood said.
He further said that the government's implemented reforms like the output-linked incentive programs won't be undone, but a big correction is likely.
Something similar happened in 2004
In May 2004, stock markets in India plunged about 20% in two days after the BJP-led government suffered a surprise defeat in national elections.
However the markets bounced back slowly over the next few months.
But it’ll bounce back soon
Despite potential market volatility, Wood identified India as the best growth story within emerging markets, particularly in Asia, and urged investors to maintain a long-term presence in the Indian market.
“But the markets would bounce back sharply due to the momentum," he said.
What did he say about China?
Wood likened China to Japan, where growth is currently slowing down. The key question, he posed, is whether this slowdown is a permanent shift or if China will experience a resurgence.
Wood expressed his belief that China's growth will return, albeit at a rate of around 3 percent over the next decade, in contrast to India's expected 6-7 percent growth rate.
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