Jefferies’ Chris Wood sees US tariffs on India as temporary, urges caution on selling
Jefferies’ global head of equity strategy, Christopher Wood, suggested that the US is unlikely to maintain a policy that undermines its strategic relationship with India. Wood pointed out that while China has been importing far more oil from Russia, it has not faced similar sanctions, and he described the targeting of India as an unexpected move.
- Aug 16, 2025,
- Updated Aug 16, 2025 6:35 PM IST
Jefferies' global head of equity strategy, Christopher Wood, advises investors to remain confident in Indian equities despite recent tariff increases by the Trump administration. According to Wood, the tariffs, which have raised the levy on Indian imports to 50%, are "somewhat unusual" and "it is only a matter of time before Trump backs off the stance, which is not in America's interest." This perspective comes at a time when Indian markets are experiencing significant foreign investor outflows.
Foreign institutional investors (FIIs) have been divesting from large-cap Indian stocks, significantly impacting sectors such as IT, metals, PSU banks, and pharmaceuticals. In 2025, FIIs offloaded over ₹50,000 crore worth of IT stocks alone. This broad divestment is linked to a mid-quarter review by Jefferies, which noted earnings estimate reductions for 50% of IT firms. Consequently, FIIs are pivoting towards small- and mid-cap stocks, perceived as more stable against global economic fluctuations.
Wood highlights the underperformance of Indian equities compared to other markets over the past year, attributing it to "very high valuations" and "a heavy schedule of equity issuance." He remains optimistic about India's long-term market prospects, emphasizing that current valuations are approaching their 10-year average premium over emerging market peers. "It is worth noting that the track record makes it clear that it pays to stand up to the Donald," Wood states in his 'Greed & Fear' report.
The imposition of tariffs on Indian goods is partly linked to India's purchase of Russian oil, a move that contrasts with China's increased oil purchases from Russia, which have not faced similar sanctions. "China has been buying much more oil from Russia but has not been sanctioned in the same way," Wood points out. He further notes that "the singling out of India in this fashion is not what most people would have predicted."
Despite market volatility, Wood underscores the potential of Indian equities as global geopolitics evolve. He notes that "BRICS as a grouping has been regalvanised," suggesting strengthening ties that could influence future investment flows positively. This shift in the geopolitical landscape may offer new opportunities for growth and collaboration among BRICS nations.
The volatility in Indian markets is evident in the changing foreign investor long–short ratio, which dropped from 36.4 in June to 14.8 in July, indicating a shift towards bearish bets. However, Wood's analysis suggests that the downturn may present a buying opportunity for investors with a long-term outlook.
In July alone, foreign investors withdrew ₹24,723 crore from Indian equities, while August has seen an additional outflow of nearly ₹14,000 crore. Despite these withdrawals, Wood encourages investors to focus on the broader political and economic contexts, including strategic alliances like BRICS, which may provide balance to these outflows.
Jefferies' Chris Wood's message is clear: Despite challenges such as high valuations and geopolitical tensions, the long-term outlook for Indian equities remains promising. Investors are advised to navigate this period of volatility by exploring emerging opportunities within the shifting global framework.
Jefferies' global head of equity strategy, Christopher Wood, advises investors to remain confident in Indian equities despite recent tariff increases by the Trump administration. According to Wood, the tariffs, which have raised the levy on Indian imports to 50%, are "somewhat unusual" and "it is only a matter of time before Trump backs off the stance, which is not in America's interest." This perspective comes at a time when Indian markets are experiencing significant foreign investor outflows.
Foreign institutional investors (FIIs) have been divesting from large-cap Indian stocks, significantly impacting sectors such as IT, metals, PSU banks, and pharmaceuticals. In 2025, FIIs offloaded over ₹50,000 crore worth of IT stocks alone. This broad divestment is linked to a mid-quarter review by Jefferies, which noted earnings estimate reductions for 50% of IT firms. Consequently, FIIs are pivoting towards small- and mid-cap stocks, perceived as more stable against global economic fluctuations.
Wood highlights the underperformance of Indian equities compared to other markets over the past year, attributing it to "very high valuations" and "a heavy schedule of equity issuance." He remains optimistic about India's long-term market prospects, emphasizing that current valuations are approaching their 10-year average premium over emerging market peers. "It is worth noting that the track record makes it clear that it pays to stand up to the Donald," Wood states in his 'Greed & Fear' report.
The imposition of tariffs on Indian goods is partly linked to India's purchase of Russian oil, a move that contrasts with China's increased oil purchases from Russia, which have not faced similar sanctions. "China has been buying much more oil from Russia but has not been sanctioned in the same way," Wood points out. He further notes that "the singling out of India in this fashion is not what most people would have predicted."
Despite market volatility, Wood underscores the potential of Indian equities as global geopolitics evolve. He notes that "BRICS as a grouping has been regalvanised," suggesting strengthening ties that could influence future investment flows positively. This shift in the geopolitical landscape may offer new opportunities for growth and collaboration among BRICS nations.
The volatility in Indian markets is evident in the changing foreign investor long–short ratio, which dropped from 36.4 in June to 14.8 in July, indicating a shift towards bearish bets. However, Wood's analysis suggests that the downturn may present a buying opportunity for investors with a long-term outlook.
In July alone, foreign investors withdrew ₹24,723 crore from Indian equities, while August has seen an additional outflow of nearly ₹14,000 crore. Despite these withdrawals, Wood encourages investors to focus on the broader political and economic contexts, including strategic alliances like BRICS, which may provide balance to these outflows.
Jefferies' Chris Wood's message is clear: Despite challenges such as high valuations and geopolitical tensions, the long-term outlook for Indian equities remains promising. Investors are advised to navigate this period of volatility by exploring emerging opportunities within the shifting global framework.