Shock election results, tax tweak may trigger equity correction on Dalal Street: Chris Wood, Jefferies
Christopher Wood of Jefferies warns of a potential market correction triggered by national elections and changes in capital gains tax. BJP's expected return to power in the upcoming elections may impact market stability.
A "surprisingly bad outcome" in , and any changes in in upcoming July budget could act as triggers for a near-term correction in Indian , Christopher Wood, global head of equity strategy at said.While a shock in 2024 elections is "extremely unlikely", markets could correct even more than the 17% fall in two sessions after the election results in 2004, Wood said.
India's national election results are due on June 4 with the ruling is expected to return to power.
Wood added a bigger risk to markets could be potential changes in capital gains tax, which could be announced in the in July.
"The issue is whether will be raised or whether the period to qualify for , or a combination of both," said Jefferies.
Currently, short-term capital gains are levied at 15% and long-term gains at 10% with the holding period defined as one year.
Woods notes another proposal would be to increase capital gains tax for retail investors but not for mutual fund investors.
Source: Stocks-Markets-Economic Times
