Christopher Wood, global head of equity strategy at Jefferies, mentioned in his weekly note GREED & fear that Indian stock markets had been a “relative-return disaster” this year.
Relative return is an asset’s performance compared to a benchmark. It indicates how well it delivered in relation to the market.
From a macroeconomic angle, Wood pointed out that he believed the rupee was increasingly likely to have bottomed after being the worst-performing major emerging-market currency so far this year.
He explained to a business daily that India had been a relative-return disaster because it had underperformed the MSCI Emerging Markets Index by 27 percentage points year-to-date, not an absolute-return disaster. He attributed this to the continued strong resilience of domestic inflows, the news report mentioned.
He noted that India’s current account deficit should be 0.5 per cent of GDP in 2025-26 (FY26), a 20-year low, and that foreign exchange reserves were at a comfortable level of $690 billion, equal to 11 months of imports.
Wood warned that, in his view, the biggest risk to the rupee’s bottoming out was the continued use of handouts in state election politics, which had been happening for the past two years. He observed that growing populism at the state level was reflected in a fiscal situation that appeared much healthier at the centre than in the states.
From a stock-market perspective, he raised the issue of whether the credit and monetary easing seen this year, along with the lowering of GST rates from September 22, would lead to a pickup in growth, especially nominal GDP growth, in the coming quarters, which he believed should occur.
He cautioned that if this expected cyclical pickup did not happen, Indian equity valuations in aggregate would become increasingly vulnerable. He also highlighted that one area where valuations looked attractively priced was the property sector.
He further remarked that one area of AI vulnerability in India continued to be the IT Services sector, where revenue growth for listed Indian IT companies had slowed to 1.6 per cent year-on-year in the September 2025 quarter (Q2-FY26), causing a de-rating.
Also Read: Indian Markets Plunge Amid US Recession Fears; Investor Confidence Takes A Hit https://www.vibesofindia.com/indian-markets-plunge-amid-us-recession-fears-investor-confidence-takes-a-hit/
