In an interview to ET NOW on Monday, Wood said, “India is ideally coming to an end of a three-week lockdown. If it imposes another three-week lockdown, Indian markets will see a selloff. There is a trade off between the healthcare and the economy.”
Wood, who heads global equity strategy at Jefferies, said he would be surprised if equities do not retest recent lows again, but noted that any announcement on drug or vaccine will be a huge positive.
The market veteran added that he has a marginally ‘outperform’ rating on India, which had been underperforming even before the outtbreak of Covid 19.
Read full interview here:
Chaotic shutdown in India makes FII sentiment more bearish: Christopher Wood
“India had a complete lack of evidence of a cyclical secular recovery. It had a zero evidence of capex cycle returning. NBFC problems have been going on for years. We also had a very delayed resolution of YES Bank issue, which still is not completely resolved,” he said while pointing out reasons for Indian equities’ poor show.
Data showed domestic indices have fallen 25 per cent since February 1 compared with approximately 15 per cent drop in the US and other EMs during the same period.
“India’s healthcare and chaotic shut in activity have re-enforced the bearish sentiment,” Wood said.
Wood said he sees a strong buying opportunity in Asian equities in the ongoing quarter as his base case is that virus cases in Europe will peak out now and in the US by end of this month, with economic activity starting next month.
“It means by June, things should start getting normal, which presents a buying opportunity for equities. However, if I am wrong, the retest of recent lows is likely,” he said.
Wood said that if one is investing in India or the emerging market space, gold is a must.
Talking about his portfolio, Wood said he has shifted weightage from lenders to insurers last year. Insurance in India is a long-term theme, he said.
One of the top-ranked market strategist, Wood, said that he is not sure if unlimited stimulus is necessarily a healthy thing, while adding that the key is to watch out for when the governments globally get economies back on track.