Chris Wood ups India stake; hikes allocation by 2% amid resilient stock mkt

After having been surprised by the resilience shown by the Indian markets over the past few weeks in the backdrop of global central banks tightening their monetary policy in a bid to fight inflation, Christopher Wood, global head of equity strategy at Jefferies has raised his exposure to Indian equities.
 

“Recent market movements, and the renewed lockdowns in China, prompt GREED & fear to make asset allocation changes in the Asia Pacific ex-Japan relative-return portfolio. With the Indian overweight having almost become Neutral, the allocation in India will be increased by two percentage points with the money raised by shaving the weighting in China,” Wood wrote in his latest note to investors, GREED & fear.

Asia Pacific portfolio allocation - Chris Wood 2022

In his Asia Pacific ex-Japan asset portfolio, allocation to Indian equities at 16 per cent is the second highest after his exposure to China, which stands at 31 per cent.

Meanwhile, Wood had expected Indian markets to consolidate in 2022 after recording strong gains in the previous year and commencement of a monetary tightening cycle by global central banks, especially the US Federal Reserve (US Fed). India, he believes, is by far the best structural story in Asia.

“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. This resilience should be viewed as reflecting the strength of the structural story,” Wood had said recently.

Despite the overall weak sentiment across most global equity markets, Indian frontline indices - the S&P BSE Sensex and the NIfty50 have gained around 1 per cent each thus far in 2022. A bulk of these gains have come in the last two months (since July) when the foreign investors who remained net buyers to the tune of $7.64 billion since mid-July. In the first six-and-a-half months of 2022, they sold a net $29.7 billion worth of Indian stocks, data show.