Stock Market Outlook: Chris Wood of Jefferies on Whether It’s Time to Buy

While global markets grapple with intricate stitching from various economic indicators alongside geopolitical strife, investors wonder whether the time is ripe for stock investment. According to Christopher Wood, Global Head of Equity Strategy at Jefferies, an assessment joins cautiousness with optimism.

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A Cautious Stance on U.S. Equities

Wood doubts the efficacy of the American stock market's trajectory, stating that it might already have reached its aegis on Christmas Eve, just before the previous year's fold-up. He further attributes such peaks to the long-lasting effects of former President Trump's tariffs, which have diminished the image of the U.S. as a credible financial haven.

The falling U.S. Dollar Index, down 8% year-to-date, and S&P 500 price-to-sales ratios at historically high levels add to worries about overvaluation. Wood observes that the U.S. market holds a 67% share of global equities, indicating a possibility of overstretching.

American exceptionalism is indeed on the wane; investors are becoming alternately skeptical about the greatness of the American economy. What recently occurred in the market reflects a notion emerging from investors that is somewhat like "selling America." They are interested in the rest of the world for opportunities.

India: A Beacon of Long-Term Growth

Wood seems bullish about India's stock market future, though short-term challenges may be weighing down the forecast. For him, the expected returns from the Sensex and Nifty indices in the next 12 months entirely depend on the return of foreign institutional investors (FIIs), which could be around 10 to 15%.

"If someone has no exposure to Indian stocks, they should start buying now. When the tide turns, the rally will be very sharp," says Wood.

Yet, substantial FII outflows and valuation points make him cautious. To date, FII divestments in Indian shares have surpassed ₹1 trillion in 2025, while domestic institutional investors have infused ₹83,000 crore into the countenance.

Wood favours travel and tourism, which he says is resilient and growing. He highlights this area as one that could outperform the market. He has not reduced his positioning in the sector in its long-only India portfolio because of the severe correction in real estate stocks since September of this year.

Geopolitical Risks and Global Market Dynamics

Geopolitical tensions, such as the ongoing warring situations in Ukraine and the Middle East, are at the international risk of market factors. Wood states that these events are still not fully priced into the markets, probably leading to widespread corrections in case of escalations. 

He adds that the coming elections in America have another layer of complexity. A Trump victory is a positive boon to business; neither of the leading candidates is addressing the country's fiscal challenges, which will affect market stabilisation post-election.

The Rise of India's Equity Culture

Wood points to skyrocketing stock market participants through SIP; increasing apprehension about long-term equities has ensured retail participation is growing in India's so-called emerging equity culture. 

He likens it to the boom in the equity market in the USA during the 1980s and 1990s. It indicates the early stages of development in India on similar lines. "Fundamentally, it is extremely healthy that the Indian market is driven by domestic flows and not what the foreigners are doing," Wood observes. 

Conclusion: A Balanced Approach to Investment

There are signs of overvaluation in the U.S. markets, and a slew of geopolitical risks means that silver linings in terms of domestic growth drivers and an evolving equity culture in India are beautiful for long-term investors. According to Wood, given the world's economic scenario, this is a good time to have a balanced and diversified investment allocation focusing on emerging markets such as India.

Note: This article is for information purposes only. It does not constitute investment advice. Investors should do their research or take the advice of a financial advisor before making an investment decision.