Greed & Fear remains a long-term bull on India, says CLSA's Christopher Wood

Christopher Wood of CLSA said Greed & Fear remained a long-term bull on India, as reflected in the nearly three times overweight in the relative-return portfolio and the 54 percent weighting in the Asia ex-Japan long only portfolio.

But Greed & Fear has to admit that there is the potential for some short-term vulnerability, and at least relative underperformance, he added.

Wood said it was certainly evident what has been driving the stock market so far this year, with the Sensex up 22 percent year to date; that is accelerating flows into local equity mutual funds.

The lack of an investment cycle, and the related lack of loan growth, are directly linked to the ongoing asset quality problem in the Indian banking system which remains the main unfinished business of the first Narendra Modi administration, he feels.