Informist, Monday, Oct 30, 2023
–Jefferies Wood: Output-linked sops to gain pace if govt re-elected
–Jefferies Wood: US dlr to keep appreciating till Fed changes policy
–Jefferies Wood: Mkts haven’t priced in escalation in West Asia war
–Chris Wood: Indian mkts should make it easier for foreign investors
–Chris Wood: NDA govt not returning with majority biggest risk to mkts
–Chris Wood: Long past days when just foreigners moved India’s mkts
–Chris Wood: India’s asset mgmt business most thriving outside of US
–Chris Wood: If pvt capex kicks in, any correction should be bought
–Chris Wood: India to see a repeat of property cycle of 2002-2009
–Chris Wood: Mid-cap stocks in India obviously expensive
–Chris Wood: India is the best growth story in the world
–Chris Wood: US to see a downturn next year
–Chris Wood: PE, private credit benefited most from near-zero rates
–Chris Wood: Possible that US bond mkt reflecting supply concerns
–Chris Wood: US markets ignoring high bond yields right now
MUMBAI – Indian equity markets face its biggest risk if the current National Democratic Alliance government is not re-elected in General Election, scheduled for mid 2024, said Jefferies’ Global Head of Equity Strategy Christopher Wood at an event in Mumbai.
“Biggest risk for Indian markets is not from US…the possibility of recession in US are not a concern to India,” he said. “The biggest risk for Indian markets is if current central government is not re-elected with meaningful working majority.” He went on to say that if the current government is not re-elected, Indian markets may fall by about 25%, similar to that seen in 2004.
On the positive side, he said if the NDA government is re-elected, production-linked schemes will start gaining momentum.
He is of the view that global markets have not priced in escalation in Israel-Hamas war. “Markets are hoping that it (the Israel war) will remain constrained to Palestine.” To support his point, he pointed towards crude oil prices and said these have barely risen.
He said that India remains the best growth story in the world, especially in the Asia region. India is capable of repeating the property cycle witnessed during 2002-09 (Apr-Mar) and that may translate into gains in equity markets, he said. “If the private sector capex (capital expenditure) cycle kicks in, any correction in Indian market should be bought.” He also said that current valuation of mid-cap stocks in India is expensive.
He also said India has the most dynamic asset management business outside the US with a thriving capital market and domestic investments. He further attributed the resilience of Indian markets during tightening of interest rates to strong domestic inflows. “Long past are the days when only foreigners moved Indian markets,” he said.
On inflows coming into India from overseas, he said that India needs to make it easier for foreigners to invest in India. “Most emerging markets are much easier for foreigners to invest in than India,” he said.
Earlier in the discussion, Wood said he believed that the US will likely see a “downturn” in 2024. He pointed out that markets in the US are currently ignoring high US bond yields and these high yields are possibly reflecting investor’s concern regarding the supply of bonds. At the same time, he said the US dollar will keep appreciating until the Federal Reserve changes policy.
On concern around US markets, he said that during a monetary tightening cycle, such as that currently happening in the US, problems emerge from areas that witnessed the biggest boom before the interest rates started rising. In relation to that, he expressed concern towards private equity and private credit areas that gained significantly during near-zero interest rates in the US. End
Reported by Anshul Choudhary
Edited by Akul Nishant Akhoury
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