India’s stock market has been under the global spotlight recently as international events spur concerns and debates about the best course of action for investors. Despite short-term volatility triggered by global factors such as new US tariffs and foreign investor selling, many prominent voices see this period as an excellent window to enter the market rather than exit it. Christopher Wood, Global Head of Equity Strategy at Jefferies, is at the forefront of this bullish outlook, urging investors to buy when others hesitate.

US Tariffs: Temporary Setback, Not a Game Changer

Recently, US President Trump announced the imposition of 50% tariffs on several Indian goods. This caught many on Dalal Street by surprise, triggering a wave of selling by foreign investors and sparking concerns about Indo-US relations. What makes the move more surprising is that countries like China, which buy even more oil from Russia, have not been targeted in the same way. According to Jefferies’ Christopher Wood, such moves should be viewed as temporary and largely political in nature. Wood asserts that “it is only a matter of time before President Trump blinks”, referencing prior instances where similarly harsh US measures were later diluted or withdrawn altogether.

Market strategists point out that such events, though serious, seldom alter India’s long-term growth trajectory. Wood encourages investors to look beyond the headlines, suggesting that decisions based on fear rather than fundamentals rarely pay off. In his view, the underlying India growth story remains strong, making the current volatility a distraction rather than a discouragement.

Valuations and Foreign Selling: An Overdone Worry?

Foreign institutional investors have been net sellers in recent weeks, trimming positions not only in IT and pharmaceuticals but also in public sector banks and metal companies. However, Christopher Wood and his team at Jefferies argue that the pressure from foreign selling is opening up a rare buying opportunity, especially as Indian valuations start aligning closer to their historical averages.

At present, the one-year forward price-to-earnings (P/E) ratio of India’s major companies stands at 20.2, down from 22.4 in late 2021. The MSCI India index premium over Asia ex-Japan is just above the ten-year average, which suggests valuations are now more reasonable. Jefferies maintains a ‘marginal Overweight’ stance for India, trusting that sharp corrections often precede strong recoveries in the Indian context.

Structural Strengths Remain Intact

Jefferies continues to peg India as the strongest structural growth story in Asia, based on multiple core fundamentals: a large and energetic consumer market, a youthful workforce, and well-calibrated government policy. Wood reminds investors that these strengths persist even during temporary bouts of volatility. Rising support among BRICS nations for India, in the wake of recent US actions, may further shore up the nation’s global standing and economic prospects.

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