Hedging Dilemma in Volatile Markets

The Indian equity market barometer, the BSE Sensex, crossed the 21,200-point mark in January 2008. However, the Indian economy was badly impacted by the recession of 2008. In the aftermath of the recession, the Indian markets were volatile and subdued until the general elections held in the country in April and May 2014 (Refer to Exhibit I). With Narendra Modi (Modi) taking over as Prime Minister, investors were convinced that there would be a phenomenal transformation in the economy. ...