Editor's note: The markets and our offices will be closed tomorrow, June 19, in observance of Juneteenth. Your next issue of DailyWealth will publish on Thursday. We look forward to rejoining you soon.

Narendra Modi won his first election as Indian prime minister 10 years ago.

He ran on a platform of economic reform. His goal was to make it easier to do business in India. And based on the stock market, his efforts paid off...

Indian stocks have returned more than 150%, including dividends, since Modi took power. That's less than the U.S.'s nearly 250% total return... But it absolutely crushes the meager 22% return of emerging markets over the same period.

Put simply, Modi has been good for Indian stocks... at least, until recently. When he won a third term earlier this month, the Indian market crashed.

That decline isn't likely to last, though. According to history, we should expect a double-digit gain in Indian stocks over the next year.

Let me explain...

Modi just won a third term as Indian prime minister earlier this month. But it wasn't the sweeping victory that many expected.

Instead of consolidating power, Modi's party failed to take full control in Indian parliament. They won 289 of 543 seats. That was well below the expectation of around 350 seats... and even further from the 400 Modi hoped to win.

This means Modi won't be able to push his economic reforms as aggressively. And the Indian stock market didn't like the news...

The benchmark BSE SENSEX Index fell 6.3% in a single day when the news hit. That's one of the worst one-day falls on record. And it wiped away all the gains of 2024. Take a look...

The crash was quick and painful. But as you can see, the market has already regained its prior highs. And we can expect the new rally to continue...

That's because Indian stocks have a history of soaring after painful one-day declines. These setups don't happen often – just once every two years since 1979. However, they consistently lead to big gains...

Most U.S. investors don't think much about India. Yet this market has a history of producing impressive returns. It has gained 9.5% per year since 1979... And that's in U.S.-dollar terms, which means currency distortions haven't thrown off the numbers.

Still, if you buy at the right times, you can do much better than that. And today's setup is one of those times...

Similar instances led to 6.4% gains in six months and 21.4% gains in a year. Those gains crush the typical buy-and-hold returns. Plus, stocks were higher a year later 82% of the time.

Indian stocks have already begun to soar after their recent nosedive. And we shouldn't expect the rally to end. Instead, this is a market to consider right now... because 20%-plus gains are possible over the coming year.

Good investing,

Brett Eversole