India Market May Still Have Legs

A recent shock defeat by India’s leading, reform-minded party may make some investors nervous, but experts say it’s unlikely to derail liberalization of the Indian economy—and the country’s real challenges lie elsewhere, anyway.

Since the election of Narendra Modi as prime minister in May 2014, Indian stock market investors have cheered Modi’s relatively liberal economic policies, pushing the benchmark BSE Sensex up 30 percent since the election and 5.4 percent so far this year.

That optimism blanched a bit this month, when Modi’s party was thrashed in state elections in Delhi by Arvind Kejriwal and his upstart AAP party, raising fears that Modi will lose the political leverage he needs to carry through with his economic, regulatory and fiscal goals.


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