New Delhi: Chris Wood, the CEO of US-based brokerage firm Jefferies, in his Greed & Fear report, warned that Indian equities may not hold as much importance for emerging market foreign investors as India markets continue to outperform and domestic fund inflows remain strong. Foreign portfolios have underperformed recently since mid-caps have outperformed blue chip stocks, said Wood. However, mid-cap stocks make up only 30 per cent of market capitalisation even as they make up 60 per cent of market inflows, he added.
What can cause market correction in India
Indian markets may undergo correction if the current ruling Narendra Modi government does not perform well, Wood wrote in his report. To be sure, even if the Modi government records the same number of seats as in the 2019 polls, it is expected to be able to run the government comfortably. Further, citing growing evidence of retail speculation in the Indian options market, Wood said the Modi government is expected to curb this development. Capital gains tax revision is one way to curb this, he added.
Are Indian markets overvalued?
It has been repeatedly mentioned that Indian markets are overvalued. SEBI chairperson Madhabi Puri Buch took on this topic by stating that Indian equity markets are safe and expected to grow further, which justifies their high valuation. To be sure, she flagged some froth in small- and mid-cap stocks, which was not indicative of the entire equity landscape in India.
Are Indian options markets risky?
Finance minister Nirmala Sitharaman recently flagged risk in the retail futures and options market segment and the importance of preventing an explosion in this segment. Previously, a SEBI survey showed that a majority of retail investors incurred losses in the F&O segment. The survey pegged it at 89 per cent of all retail investors or 9 out of 10 individual traders who incurred losses worth Rs 1.1 lakh in FY22.
Chris Wood, the CEO of US brokerage Jefferies warns of a potential fade in external investor interest when it comes to Indian markets. He identified two factors: election results as well as a potential crackdown on capital gains, as major factors that can affect external investor sentiment towards India. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
