Christopher Wood, global head of equity strategy at Jefferies and author of the closely tracked Greed & Fear report, said in his latest note that he is maintaining only a marginal overweight on India in the Asia Pacific ex-Japan relative-return portfolio.
Wood noted that India, which has traditionally enjoyed a significant allocation in Greed & Fear portfolios, has suffered one of its steepest relative underperformances in 15 years. Citing Jefferies’ India research, he pointed out that the MSCI India index has lagged the MSCI Emerging Markets index by 24 percentage points over the past 12 months, and by 18 percentage points since mid-April.
He attributed this underperformance primarily to high valuations and a flood of equity supply.
“For India, the problem has been high valuations and, most importantly, massive equity supply,” Wood said. The Nifty is currently trading at 20.2 times one-year forward earnings — still above historical averages, though down from the 22.4x peak in October 2021. Monthly equity supply hit a record $10.4 billion in June, compared with an average of $7.3 billion in the second half of 2024.
“Korea has ripped higher on the Value-Up theme, while Taiwan has been buoyed by hyperscaler-driven capex,” Wood added, highlighting how competing Asian markets have surged even as India stumbled.
Despite the cautious stance, Jefferies’ India report points out that Indian markets have often bounced back strongly after such phases of relative weakness. “Following previous such periods of underperformance, the Indian market tends to bounce on a relative basis,” Wood noted.
Current valuations, trading at the 10-year average premium of 63 percent over emerging-market peers, may also suggest that the downside is already priced in.
Domestic flows are providing further resilience. Equity mutual fund inflows nearly doubled in July to $6.4 billion, the highest since October 2024, while broader domestic inflows (including non-mutual fund investors) averaged $7.2 billion per month in the first seven months of 2025, compared with just $2.4 billion in 2023.
On the policy front, the Reserve Bank of India has already cut rates by 100 basis points this year and maintained a dovish stance in its latest meeting, though the rupee has weakened 4.2% against the dollar since May.
Wood also downplayed the risk from the proposed 50 percent US tariff, calling it more of a buying opportunity. “Rather, it is probably a reason to buy them, since Greed & Fear’s view is that it is only a matter of time before Washington backs off the stance, which is not in America’s interest,” he said.
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