The India story would be badly damaged if Prime Minister Narendra Modi is not re-elected, said CLSA's Chief Strategist Christopher Wood in his widely read weekly newsletter 'Greed & Fear'.Wood said that India has not been the flavour of the month so far in 2018 due to a sell off in the bond market and concerns about renewed weakness in the rupee on the back of rising current account deficit and oil prices but the country remains the best long term story in Asian equities.However, whether India will outperform would depend, in terms of the US dollar performance, on the rupee, said Wood.Wood believes that risks on the Indian currency are rising in the near term due to the continued rally in oil prices and the rupee also does not look cheap on a real effective exchange rate basis.Wood said that he is not too concerned on the fiscal slippage front."The budgeted central government fiscal deficit of 3.3% this fiscal year hardly suggests extreme fiscal laxity. It is also questionable whether Modi will really turn as “populist” as some fear since this will be contrary to his whole political ethos which is about encouraging development and investment, not handouts," said Wood.Wood said that the valuations of the Indian stock market remain high, particularly in the mid-cap segment, though they are lower than peak levels hit earlier this year.Corporate profits as a percentage of nominal GDP remain comparatively depressed, which reflects continuing lack of a new investment cycle, he said."The commencement of a new investment cycle becomes much more likely if the NPL overhang in the banking system is finally resolved," said Wood.On risks to the Indian market, Wood said a sharp slowdown in mutual fund inflows is a clear risk."This risk grows the more the stock market declines. Still the good news is that so far inflows have slowed but not yet collapsed, let alone turned into outflows," said Wood.Investors who want to hedge their overweight position in India can do so by being overweight Russia given that a further rise in oil price is a major risk.