MUMBAI: Investors should look to accumulate cyclical stocks amid the ongoing weakness in this space, Christopher Wood, global head of equity strategy at Jefferies, wrote in his latest ‘GREED & fear’ report.
While Wood expressed some concern over the latest surge in Covid-19 cases in India, he noted that “so far there are no signs of renewed across-the-board lockdowns.” For the moment, February marked a temporary peak in the post-Covid rebound in economic activity, he said.
India finds itself in the grips of a second wave of infections, although most of the cases have been concentrated in six states. In the states where cases have spiked, the governments have been quick to impose limits on movement, leading to concerns that such localised lockdowns may hamper economic recovery.
However, Wood noted that real estate sale registrations in Mumbai and Delhi grew 72 per cent and 38 per cent, respectively, in February. The sharp rise in realty sales underpins Wood’s confidence in suggesting to investors to accumulate cyclical stocks in the current correction.
The positive point for India is that it is a fast-emerging manufacturing centre for Covid vaccines. In the best case scenario, 2021 vaccine quantities for India could cover 78 per cent of the population with Sputnik V, Johnson & Johnson and Novavax vaccines likely to be available in the June quarter of 2021, Wood said.
He retained India’s ‘overweight’ status in his Asia-Pacific ex-Japan portfolio, even as he downgraded the Philippines to ‘underweight’ and reduced his ‘overweight’ on China.