‘This resilience should be viewed as reflecting the strength of the structural story.’<\/strong><\/p>\n \u00a0<\/p>\n Christopher Wood, global head of equity strategy at Jefferies who expected calendar year 2022 (CY22) to be a period of consolidation for the Indian stock markets after the strong gains in 2021, is surprised by its resilience in the backdrop of a monetary tightening cycle by the central banks.<\/p>\n ‘From a stock market standpoint, GREED & fear has been viewing calendar 2022 as a year of consolidation for the Indian stock market after the strong gains recorded last year and the negative of the commencement of a monetary tightening cycle,’ Wood wrote in his recent GREED & fear note to investors.<\/p>\n ‘Still 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,’ Wood added.<\/p>\n ‘This resilience should be viewed as reflecting the strength of the structural story,’ he explained.<\/p>\n The Nifty has rebounded by 16.5 per cent since mid-June, while the MSCI India Index has outperformed the MSCI AC Asia Pacific ex-Japan Index by 16.5 per cent since late June.<\/p>\n Even in a phase of market correction, the Indian stock market stood tall.<\/p>\n The MSCI India declined by 5.8 per cent in US dollar terms year-to-date, compared with a 24 per cent decline in the MSCI China and 18.5 per cent drop in the MSCI AC Asia Pacific ex-Japan Index, data show.<\/p>\n The sharp rally in the Indian equities since July has mostly been led by foreign investors, who remained net buyers (of Indian stocks) in the past six weeks, buying a net $7.64 billion since mid-July.<\/p>\n In the first six-and-a-half months of 2022, they sold a net $29.7 billion worth of Indian stocks, data show.<\/p>\n Further evidence of economic resilience and animal spirits, according to Wood, is continuing strong goods and services tax revenues and buoyant retail sales.<\/p>\n GST collections rose by 28 per cent YoY to Rs 1.49 trillion in July, the second-highest level ever.<\/p>\n This sharp rally in Indian equity markets since July 2022 has made analysts tactically cautious with Mahesh Nandurkar, managing director at Jefferies expecting a 15 per cent correction amid rich valuations.<\/p>\n ‘India’s 10-year government securities rate has fallen from the recent peak of 7.62 per cent in June, down to 7.35 per cent. However, the market 12-month forward price-to-earnings has gone up to 19.3x, driving the bond yield-earnings yield gap up to 2.2 percentage points, which is 113-basis point higher than average,’ Nandurkar wrote in a recent report co-authored with Abhinav Sinha.<\/p>\n ‘A potential mean reversion would imply a 15 per cent correction,’ Nandurkar and Sinha added.<\/p>\n Despite this, in his Asia ex-Japan long-only portfolio, Wood maintains a dominant 40 per cent weight on India since he believes India is by far the best structural story in Asia.<\/p>\n ‘In a year of monetary tightening, the 30 per cent weight in the Indian financial and property sectors in the Asia ex-Japan portfolio means these stocks have been tactically vulnerable in 2022 after going vertical last year, particularly in the case of property stocks,’ Wood stated.<\/p>\n ‘Still GREED & fear is going to stick with the structural story in terms of the Indian portfolio exposures since these are long-term portfolios not tactical benchmark tracking exercises,’ Wood added.<\/p>\n ‘Affordability measures for Indian homebuyers are also much better than for most countries.’<\/p>\n<\/div>\n[ad_2]\n<\/p>\n News From This Website <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<\/p>\n