Indian equities-buy only on a dip: Chris Wood

"GREED & fear had been expecting India to underperform in the Asian context in the first quarter of this year, as it probably would have done were it not for the further collapse in Chinese equities triggered by President Xi Jinping's decision to double down on the Covid suppression policy. This had also been the expectation of foreign investors, which is why there was record foreign selling of Indian equities in the first quarter of this year," Wood said.

Meanwhile, foreign investors, according to data, have sold a record net $13.5 billion worth of Indian equities in the first quarter of calendar year 2022 (Q1-CY22) and another $3.8 billion in April. Of the total outflow of $17 billion seen over the last four quarters, according to a Jefferies note, active funds (India-dedicated and Non-dedicated) accounted for a large portion of this outflow.Passive India-dedicated funds also have witnessed some outflow over the last four quarters.

Back home, the S&P BSE Sensex and the Nifty 50 have slipped over 7 per cent each in the last one month. On Friday, both the indexes lost ground – triggered by a sell-off in the US markets that saw S&P 500, Nasdaq Composite and the Dow Jones Industrial Average tank 3.51 per cent, 4.90 per cent and 3.03 per cent, respectively in the worst single-day sell-off since 2020.

US equities, Wood had warned last week, are likely to be hit by a ‘wave of redemptions’ as the US Fed tightens its monetary policy and winds down its bond-buying program.