"We believe President Xi has consolidated power, removed obstacles and established the political mechanisms to push through reforms," read the note.
(Watch now: China reforms to lift market valuations: Stanchart)
"We believe the creation of a Central Reform Committee (likely to be chaired by Secretary Xi) under the Party (not the government) is critically important. We believe this committee will be able to cut through calcified bureaucracies and vested interests to get things done," they said, adding that the reason why other governments haven't been as successful with their reform plans in the past was due to their inability to cut through these vested interests.
As a result, Chinese stocks are now poised for a strong rally towards the end of this year and into 2014, the note said. Jefferies declined to give specific forecasts, but said they expected the country's equity market to generate modest double digit growth in 2014.
(Read more: Another false dawn for Chinese stocks?)
"As expected, policy uncertainty has made 2013 challenging for equities... 2014 will be different, in our view. We believe policy consensus has been reached and markets will gain strength with reform clarity and confident implementation," they said.
Jefferies recommended investors bought stocks in sectors including airlines, autos, banks, brokers, consumer staples, health care, insurance, internet, clean energy and retail property, and sold stocks exposed to industrials, metals & mining, residential property, shipping.
—By CNBC's Katie Holliday: Follow her on Twitter