I am suspicious of the rally in US, India: Christopher Wood


Christopher Wood, global head of equity strategy at Jefferies, says the recent run-up in equities is more of a bear market rally in the US, which Indian stocks are tailing. In an interview with Sanam Mirchandani, Wood said India is not among his top investment destinations at the moment. Edited excerpts:

What is your evaluation of the rally in Indian markets?

My view is that it is a bear market rally in the US. The reason to be sceptical about the rally in America is that you have a double whammy – tightening of higher rates and shrinking balance sheets – which is negative for liquidity. The rally is driven on hopes that inflation pressures have peaked. Inflation may have peaked but the key issue is whether inflation has settled. The real issue is whether the Fed is going to try and meet its 2% target. India is just following the US. I am suspicious of this rally in the US and India. The market rally in India is closely connected to the rally on Wall Street. Correction in oil has also helped India. I personally remain bullish on oil. I want to continue to own energy stocks. I have not changed my view on India. The key issue here in India is how much rates go up and how far the rupee declines.

Is the Fed likely to continue raising rates aggressively?

The Fed is talking hawkish but at the end of the day, I’m sceptical they are going to stick to the 2% target. My guess is inflation is running about 4% or 5% in America at the end of this year. The inflation issue in America or Europe is much bigger than in India.


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