InvestorQ : Why has Jefferies trimmed its exposure to Indian stock markets?
Neelam Naik made post

Why has Jefferies trimmed its exposure to Indian stock markets?

Anu Biswas answered.
1 year ago

The former iconic head of CLSA and the current equity strategist at Jefferies, Chris Wood has cut his overweight exposure to India by 2% and in turn hiked the allocation to Singapore and Taiwan by 1% each. Only in December, Wood had hike the exposure to India in two tranches. However, his big concern at this point is that the market was not factoring in the spike in COVID cases and the sporadic lockdowns across major Indian cities.

On the debt side, due to falling yields, Wood has move the allocation from the 10-year bonds to the 15-year government bonds which offers a higher yield of 6.71%. However, Wood is not alone as analysts at Nomura have also raised such concerns. However, both Nomura and Jefferies have also pointed that they expect the overall impact of the event on the corporate earnings to be relatively muted, unless the pandemic really picks up steam.

Nomura has pointed out that if the second wave worsens, a likely scenario, June quarter could be weaker although they do expect the full year GDP growth in FY22 to still be above the projected 10.5%. The overall impact on the market would only be marginal.