Wood said if he had to own one stock market globally for the next 10 years and not be able to sell it during that period, that market would be India.
Hong Kong-based Wood said that from a macro perspective, India looks to be in a similar condition to where it was in 2003 when the country embarked on the last property and capex cycle.
In a recent note, Jefferies’ India strategist Mahesh Nandurkar said rising interest rates will not derail the coming investment cycle and instead, reflect accelerating growth and a bullish equity market. The 10-year bond yield rose from a low of 5% in the 2003-04 to 8-9% over the next several years without impacting the accelerating investment-led cycle, the analysis by Jefferies showed.
“…any sell-off in Indian equities triggered by tapering/tightening scares on Wall Street will provide opportunities to add to Indian equities, most particularly if this coincides with a further likely rise in the oil price on an accelerating re-opening of the global economy,” said Wood.
Morgan Stanley on Thursday downgraded Indian equities to equal-weight from overweight saying that valuations are increasingly constraining returns over the next three to six months. Japan-headquartered Nomura on Monday downgraded Indian equities to neutral from overweight, citing unfavourable risk to reward ratio.
UBS recently maintained its overweight stance but said valuations were expensive relative to Asean countries.
