US agency backs Indian market, says it’s time to buy not sell; Trump eases tariff concerns

Amid the boom in the Indian stock market, Christopher Wood of Jefferies has advised investors to buy in India. Wood also stressed on the possibility of de-dollarization of BRICS countries as Trump's policies are bringing them closer. He has expressed a positive outlook on investing in India.

Indian stock market witnessed a boom after a long time. Sensex jumped by about 1146 points. Meanwhile, Christopher Wood of global brokerage giant Jefferies has suggested that India does not need to say no to US President Donald Trump's tariffs. He advised Jefferies' clients to buy instead of selling in India in view of the current global situation.

Wood said that Trump is going against some of the world's largest economies. But this will push the BRICS group i.e. Brazil, Russia, India, China and South Africa towards de-dollarization. De-dollarization refers to a trade process where, instead of using the US dollar as the currency for trade between two countries, the partners trade in non-dollar currencies.

In his much-discussed newsletter, "Greed and Fear," Wood said Jefferies would not consider the already discussed 50% tariff on Indian imports to the US as a reason to sell Indian stocks. "Rather, it is probably a reason to buy them because Greed and Fear believes it is only a matter of time before Trump backs down from his stance, which is not in the US's interest." "It is worth noting at this point that the track record makes it clear that standing up to Donald is going to pay off," he said.

Wood said Jefferies has almost always been very bullish on India across Greed and Fear's various portfolios, particularly the Asia-ex-Japan long-only portfolio. He noted that a recent Jefferies India report showed that in the context of global emerging markets spanning the last 15 years, the country has suffered its biggest period of underperformance in the last 12 months.

Strategically, this is not a huge surprise, as Korea has driven much of the gains on the back of value-add, while Taiwan has recently been celebrating massive capital expenditures by hyperscalers (leading global tech companies currently spending). The problem for India has been high valuations and, most importantly, huge equity supply.

This is why we have recently been only modestly overweight on India in a relative-return portfolio excluding Japan in the Asia Pacific region.

Still, Jefferies India made an interesting observation in the report: After the last such period of underperformance, the Indian market has rebounded on a relative basis.

"Or, in other words, it's too late to reduce investment in India now that market valuations have reached around the 10-year average 63% PE (price-earnings) premium to emerging market peers," Wood said.

The Jefferies strategist also said that a key reason for the BRICS countries to come together again is that a major world power needs a conceptual framework to conduct effective foreign policy and "this is what the current US administration clearly lacks. The 47th US president certainly has no such framework and he has no advisors who do."

"This has become even more evident in the last few days, as Trump has been more successful than ever in bringing together China, Russia, India and Brazil. Indeed, BRICS as a group has been revitalized," he wrote in the newsletter.