Jefferies has gone bullish on India at the same time as international markets navigate macroeconomic volatility, citing 5 sturdy causes for its ‘chubby’ stance on the nation. In its newest technique notice, the worldwide brokerage stated India may emerge as a relative outperformer amongst rising markets, regardless that predicting absolute index ranges stays powerful.
1. Low publicity to US-China makes India resilient
India’s restricted dependence on the US and China makes it much less weak to main energy shocks, Jefferies stated. Whereas the US is India’s high export market, exports to the US account for simply 2.3 per cent of India’s GDP — a lot decrease than different EM friends. This buffer makes India higher positioned to resist any future disruptions in international commerce flows or aggressive tariff motion.
2. Softer tariff blow vs friends
Even with US-imposed tariffs of 26 per cent on Indian items, the blow is way lighter in comparison with nations like China, Taiwan, and Indonesia. Jefferies highlighted India’s confidence in ongoing bilateral commerce talks with the US, which may result in extra beneficial phrases and assist export-oriented sectors.
3. Falling crude oil costs enhance macro stability
Brent crude has fallen round 20 per cent year-to-date to close $60/barrel, which is a constructive for India — a significant web oil importer. Decrease oil costs not solely ease the present account deficit but additionally give the federal government extra fiscal room through increased gasoline duties, enhancing the macro outlook.
4. FPIs are underweight
Overseas portfolio traders have bought $27 billion value of Indian equities since September 2024. However Jefferies sees this as a contrarian alternative. Many international EM fund managers are nonetheless impartial or underweight on India — a pattern that would reverse with higher sentiment and secure macro fundamentals.
5. RBI liquidity push strengthens monetary tailwinds
Jefferies flagged the RBI’s shift to an accommodative liquidity stance as a key constructive. Since December 2024, the central financial institution has injected liquidity value Rs 8.5 lakh crore (2.6 per cent of GDP), turning a deficit right into a surplus — which might assist deposit charge cuts and financial institution margins.
High sector bets: Lenders, energy, telecom lead the pack
Jefferies stays bullish on banks, energy, telecom, autos, and actual property. High inventory picks embrace HDFC Financial institution, Axis Financial institution, Cholamandalam Finance, JSW Vitality, Coal India, Bharti Airtel, TVS Motor, Eicher Motors, and Macrotech Builders. NTPC and BPCL had been latest additions, whereas Siemens India was trimmed because of its decrease energy combine publicity.
