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I am sceptical about the rally in the United States and India: Christopher Wood The latest run-up in stocks, according to Christopher Wood, global head of equity strategy at Jefferies, is more of a US bear market rally that Indian stocks are following. In an interview with Sanam Mirchandani, Wood stated that India is not now one of his top investment locations. Edited passages. Follow For More Updates at Worldrapiddnews.com

What do you think of the market rally in India?

In my opinion, the US is experiencing a bear market rally. Because of the double whammy of shrinking balance sheets and tighter higher rates, which is bad for liquidity, it is prudent to be sceptical of the rally in America. Hopes that inflationary pressures have peaked are what are driving the rally. Although inflation may have peaked, the main question is whether it has stabilised. The fundamental question is whether the Fed will make an effort to achieve its 2 per cent goal. India is merely imitating the US.

I have my doubts about this rally in India and the US. The market rally on Wall Street and in India are closely related. Oil price reductions have also benefited India. I continue to be bullish on oil. I intend to keep investing in energy stocks. I still hold the same opinions on India. How much interest rates rise and how far the currency depreciates are the main concerns in India.

Is it conceivable that the Fed will keep hiking interest rates quickly?

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Despite the Fed’s hawkish rhetoric, I have my doubts that they will adhere to their 2 per cent target. At the end of this year, I’m estimating that inflation in America will be about 4% or 5%. Inflation is a far bigger problem in America or Europe than it is in India.

Is the worst of the selling by foreign investors in Indian stocks over?

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Compared to what they sold, they haven’t purchased that much. The fact that foreigners were investing more money in China was one of the reasons why they sold so much in India earlier this year. China appeared more appealing since its policies were loosening while India’s were tightening. But the ongoing COVID suppression policy has seriously hurt the Chinese economy’s investment narrative in recent months. As a result, investors are now less optimistic about China.

Where will the price of oil go?

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I anticipate an increase in oil prices by the end of the year. The weak Chinese demand, which is tied to the COVID suppression programme, is the main cause of the low oil prices. Although the COVID suppression programme is bad for China, it is good for the Indian economy and market. Due to the scarcity of oil, I continue to be structurally positive about the commodity. The cheaper Russian oil is the other positive news for India. The COVID suppression programme has significantly slowed down China’s economy and undermined consumer confidence, which has resulted in a decline in energy demand.

What position does India have on your list of potential investment locations?

Due to the ongoing monetary tightening cycle, India is not the best market this year. At the time of my most recent check, Indonesia had Asia’s best-performing market. Indonesia has been the country in Asia where I have gained the most weight so far this year. India is excellent, yet there are many crosscurrents in India. India is my favourite wager for the next 10 years, but not in 2022. The RBI is getting tighter. Although it was late, it is not as horrible as it was.

I still think the price of oil will rise. I’m a little overweight in India, but not significantly so. Geopolitical variables, the most significant of which is China’s COVID suppression programme, have caused India to do better than I anticipated at the beginning of the year. The Chinese stock market would be performing considerably better and India’s stock market would be underperforming if China did not have the COVID suppression programme.

What the RBI does is significant for India. The stock market in India has been quite resilient this year, considering the significant volume of foreign selling. Long-term investors should keep their money in India, but a correction is undoubtedly becoming more likely. The RBI’s actions are significant.

What predictions do you have for the rupee?

As long as there is tightening, the Indian rupee will be susceptible. The good news is that the RBI started this year far behind schedule. Since the RBI started hiking rates in recent months, I’ve been less concerned about the Indian rupee. Prior to our inter-meeting hike in January and February, I felt more anxious. India’s inflation problem is more serious than it is, for instance, in China or Indonesia. India’s currency has therefore been weaker for this reason.

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