Even as the stock markets continue to remain volatile ahead of the election results, CLSA's Chris Wood says that the Sensex and Nifty will go down without a doubt in case current prime minister Narenda Modi doesn't return to power.
Even as the stock markets continue to remain volatile ahead of the election results, CLSA’s Chris Wood says that the Sensex and Nifty will go down without a doubt in case current prime minister Narenda Modi doesn’t return to power. “If Modi loses, the stock market is going down without a doubt. But, obviously if it goes down too much, then it’s attractive as India is still going to grow at 7%. The precedent is what we saw in 2004,” Chris Wood, Chief Equity Strategist at CLSA told in an interview to ET Now.
In his latest Greed and Fear report, Chris Wood has compared Naredra Modi’s current position to UK’s Margaret Thatcher. Explaining this analogy, Wood said that Margaret Thatcher had an agenda to change the UK, which actually she succeeded in doing. “She was able to do that, as she came back thrice in government. Towards the end of her first term, it was far from clear that Thatcher was going to be re-elected because she was implementing some painful structural reforms, and that’s where I think there’s a bit of an analogy,” he told the channel.
According to his assessment, it has become more likely that we will see a BJP-victory with a reduced majority. Outlining the impact of Lok Sabha polls on stock markets, Wood said that the view is that elections will have a short-term impact on market dynamics. However, India will still be growing at about 7% for the next 10 years. “The stock market’s ideal outcome would be as big a majority as possible for the current government,” he said.
Drawing parallels from 2004, Chris Wood noted that people the consensus view back then was that BJP would return. However, it lost dramatically, and the stock market collapsed for the next 5 days, he said. Taking stock of the prospects of Indian currency rupee, he said that it has not been a favourite. “My bullishness on the Indian market is greater than my bullishness on the Indian rupee,” he added.