India is best post-COVID recovery story in Asia: Chris Wood

Chris Wood, global head of equity strategy at Jefferies, reiterated his bullish views on Indian equities in his weekly newsletter GREED & fear. Wood said, right now, India is the best post-COVID recovery story in Asia.

He attributed the development to a steady decline in coronavirus cases along with sharp economic recovery. "With COVID cases in India now 88 percent off their peak amid growing hopes of herd immunity, India looks right now Asia's best post-COVID recovery story," Wood wrote in his weekly note to investors.

Wood said there needs to be an economic downturn or a material tightening in the US Federal Reserve's policy for the stock market to have a 'real nasty unwind' at the global level. He, however, ruled out the possibility of either of these events materialising.

On inflation, Wood said oil prices crossing $61 per barrel mark for the first time in 13 months has again stoked fears of inflation, especially for India as it imports around 70 percent of its crude oil requirement.

Wood believes rising inflation expectations will boost cyclicals and prefers banks and oil-related stocks. "One of the favoured cyclical areas is, clearly, banks. Banks in Europe and Asia ex-Japan offer over 40 percent upside if they are simply re-rate to a level of one standard deviation below the long-run mean in terms of the relative price to book multiple," Wood said.

He also suggested that investors use any dips to buy bitcoin. In December 2020, Wood had trimmed his exposure in gold in favour of bitcoin. "GREED & fear remains extremely bullish on Bitcoin and advises those who are not invested to take advantage of any pullbacks. Remember that institutional ownership of Bitcoin has only just begun," Wood added.