Trump Tariffs Impact: 'Not A Reason To Sell Indian Equities,' Says Jefferies' Chris Wood — Here's Why
India is better positioned compared to the emerging markets in the context of global trade and US-China tensions, Jefferies said in a GREED & Fear note.
The new US tariffs on India should not be viewed as a reason to exit domestic equities, Jefferies strategist Christopher Wood said, calling them instead a reason to add exposure.
“GREED & fear would not view the previously discussed 50% tariff with the US as a reason to sell Indian equities. Rather, it is probably a reason to buy them since India is one country in the world where it pays to stand up to the Donald,” Wood wrote in a GREED & fear note.
The comments come after US President Donald Trump announced a 25% tariff on July 30, citing India’s purchases of Russian military equipment and energy. He followed with another 25% tariff on Aug. 6 over Indian imports of Russian crude.
It is only a matter of time before Trump backs off the stance which is not in America’s interest.Christopher Wood, Global Head of Equity Strategy at Jefferies
Since July 30, India’s benchmark NSE Nifty 50 has declined 0.9% as of Aug. 14, though it pared losses with a 0.23% gain after the second announcement. The rupee also fell 0.16% against the dollar in the same period.
Wood framed India as better positioned than other emerging markets in the context of global trade and US-China tensions.
India Outlook
Jefferies kept a “marginal Overweight” stance on India in its Asia ex-Japan relative-return book. Wood wrote that “India represents the best long-term structural story in Asia.” He added that the focus for investors in the country “has always been on domestic demand".
Indian equities are trading at 20.2 times one-year forward earnings, down from 22.4 times at the peak in October 2021, Wood noted, adding, “The MSCI India index is valued at a 67% premium to Asia ex-Japan, compared with a 10-year average of 63%.” Despite this, India has underperformed the broader index by 18 percentage points since mid-April and by 24 percentage points over the past year, Wood said.
