Wood has increased weightage of Indian equities by 150 basis points to 14 per cent in his Asia Pacific ex-Japan relative-return portfolio, by trimming exposure to Chinese and Pakistani equity markets, the marquee investor said in his latest
GREED and Fear report.
“With seven-day average daily Covid cases in India now running 78 per cent below their peak reached in mid-September, even though the Diwali holiday took place early November, there is growing hope that Covid really has peaked,” Wood said.
This is the second consecutive month in which Wood has increased the weightage of Indian equities in his portfolio. In December, the ace investor had raised exposure to Indian stocks by 100 basis points, which followed a similar hike in October.
The overweight on Indian equities in Wood’s portfolio relative to the benchmark MSCI Asia-Pacific ex-Japan index is now 500 basis points, the highest among individual countries. The overall weight of Indian stocks in Wood’s portfolio will now stand at 14 per cent, equal to that of Taiwanese equities and second only to China.
The increase in weight for Indian equities comes on the back of rising concerns over valuations of domestic stocks, which have lifted both Nifty50 and BSE Sensex to their lifetime highs and raised one-year forward earnings to their highest level in recent history.
Last month, Wood had raised concerns over the sharply expanding valuations of Indian equity market, but he sounded confident that valuations will become relatively cheaper as corporate earnings growth catch up in 2021.
The Nifty50 index has rallied 23 per cent since October, aided by over $13 billion in net buying by foreign portfolio investors and optimism that the rollout of Covid-19 vaccines in 2021 will lead to a sharp rebound in GDP growth and corporate earnings.
