Chris Wood On Indian Stock Markets: Christopher Wood, global head of equities at Jefferies, has been bullish on India for some time now. In his weekly newsletter GREED & fear, said that he is surprised by the Indian stock market‘s resilience in the backdrop of a monetary tightening cycle by the central banks.
In his weekly newsletter, he said that “The reality is that the Indian market has so far surprised everyone, including GREED & fear, by its resilience in the face of bearish sentiment triggered by the wave of foreign selling, prevailing high valuations and monetary tightening,” said Wood.
“Still GREED & fear is going to stick with the structural story in terms of the Indian portfolio exposures since these are long-term portfolios not tactical benchmark tracking exercises. Affordability measures for Indian homebuyers are also much better than for most countries,” Chris Wood said.
Although Wood had, at the start of the year, pegged India to be an underperformer, he said domestic markets have surprised everyone.
Chris Wood has maintained his position with 61 per cent in financial and property stocks in the India portfolio despite a cautious approach taken by Jefferies’, head of India research, Mahesh Nandurkar. Wood said that Nandurkar remains tactically cautious on the market because of high valuations. “The market is on 19.3x earnings on a 12-month forward basis. Still, the reality is that the Indian market has so far surprised everyone, including GREED & fear, by its resilience in the face of bearish sentiment triggered by the wave of foreign selling, prevailing high valuations and monetary tightening. In this respect, GREED & fear’s impression when in Mumbai in April is that everyone was waiting for a correction,” he added.
The Nifty Index has rebounded by 16.5 per cent since mid-June, while the MSCI India Index has outperformed the MSCI AC Asia Pacific ex-Japan Index by 16.5 per cent since late June, noted Wood.
Foreigners have also returned as net buyers of equities in the past six weeks, buying a net $7.64 billion since mid-July after having sold a net $29.7 billion worth of Indian equities in the first six and a half months of the year.
“This resilience should be viewed as reflecting the strength of the structural story. Meanwhile, China Covid suppression and the Ukraine conflict have also helped at the margin by keeping the price of oil lower than it otherwise would be while allowing India to buy Russian oil at a discounted price,” said Wood.
The resilience shown by domestic markets should be viewed as reflecting the strength of the structural story, Chris Wood wrote while reiterating that India remains “by far the best structural story in Asia”.