Jefferies’ Chris Wood: ‘Won’t change India stance due to Trump fears’

A Trump presidency wouldn’t significantly alter India’s growth trajectory, said Chris Wood, Global Head of Equity Strategy at Jefferies. Speaking at CNBC-TV18’s Global Leadership Summit in Mumbai on Thursday, November 14, 2024, the ace investor addressed concerns about the US elections and their potential impact on emerging markets, particularly India.

In his latest Greed & Fear note, Chris Wood maintained his long-term bullish stance on Indian equities, albeit with some caution. He views the recent market correction as a positive development.

As of October 2024, Jefferies remains “overweight” on Indian markets, despite cutting the exposure to Indian equities by 1%.

While acknowledging the potential volatility triggered by US economic policies, he reaffirmed his stance: “I won’t change my India investment strategy just because Donald Trump is elected.”
“Personally, I don’t think for India, per se, it makes a huge difference,” he stated, adding that India is still on course for 6%-8% real GDP growth and 10%-12% nominal GDP growth in the next five years.

He did acknowledge, however, that Trump’s election has created a negative headwind for emerging markets in the near term. The surge in the US dollar, triggered by the US election results, has led to a tightening of conditions for Asian central banks, making it harder for them to cut interest rates.

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Wood clarified that despite this, India’s growth story isn’t dependent on aggressive rate cuts by the Reserve Bank of India (RBI). “The Indian equity story is not predicated on the RBI about to do a lot of rate cuts,” he remarked, underscoring that this should not be seen as a major negative for India.

In response to questions about the recent foreign sell-off in India, Wood described the current market correction as “healthy,” driven by small-cap stocks. He explained that the rise in equity supply, as companies raised capital amid high valuations, led to some market indigestion.

Despite this, Wood expressed confidence that the ongoing domestic inflows into Indian equities will continue to support the market. “Based on the latest data I’ve seen, we still have huge domestic flows coming into the Indian market,” he said, adding that this continued domestic support makes the current correction much more manageable.