India remains favourite stock market from 10-year view, says Jefferies' Chris Wood

Christopher Wood of Jefferies in his latest GREED & fear note said India remains his favourite stock market on a ten-year view. He said this is the main reason why global investors, and not just Asian and emerging market specialists, should be invested in it, "most particularly given the undeniable question marks surrounding the long-term direction of China."

Wood said Jefferies' prime Asian weighting in the global portfolio is India, with a 26 per cent weighting, adding that "this is one GREED & fear is happy to stick with."

Jefferies' global long-only portfolio includes six Indian stocks namely HDFC Bank (5 per cent weight), ICICI Bank (5 per cent), Zomato (4 per cent weight), Reliance Industries (4 per cent), Godrej Properties (4 per cent) and Axis Bank (4 per cent).

Wood said it remains much clearer that inflationary pressures have peaked in India and the rest of Asia than is the case in the US.

To recall, Jefferies in a recent note showered praise on India's progress over last couple of years. It said Chinese people post-pandemic no longer have an unbridled confidence in the future of their country; the reverse now applies in India amidst much fashionable talk, which is no longer completely far-fetched of India becoming the major beneficiary of production being moved out of China in the next ten years, the foreign brokerage recently said.

Jefferies cited the transformation of physical infrastructure, where the fiscal deficit has in recent years been primarily spent on investing in infrastructure and not on entitlements.

"The result is that the huge deficiencies in infrastructure, so visible when GREED & fear first visited the country on a business trip back in 1996, have now been largely addressed. This has to lead to an improvement in the return of capital with one example among many the nearing completion of the two dedicated freight rail corridors. This will massively reduce the time moving goods from Delhi to Mumbai, for example, from at least 24 hours to 12-15 hours."

Jefferies said if the infrastructure upgrade is one big positive change, another one which impacts everybody is the distribution of targeted welfare via the use of technology and the successful exploitation of combining the Aadhaar electronic ID card developed during the previous Congress government with the Direct Benefit Transfer (DBT) scheme.

Jefferies said the practical result of DBT has been a dramatic decline in leakages in the distribution of welfare which helps explain why the support for the BJP, traditionally a party of small businessmen and traders, has spread to the urban poor and rural constituencies.

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