Jefferies flips from AI buzz to undervalued India

Jefferies' global equity strategist Christopher Wood says the AI‑stock rally is losing steam as investors grow weary of soaring valuations. He is pivoting the firm's regional bias toward India (and China) where valuations remain cheap, while still staying long on memory‑chip makers that supply AI hardware.

Nearly 60% of the $20 bn that flowed into India‑focused equity funds in 2023‑24 has been pulled out, with $9 bn exiting in calendar 2026. Investors are fleeing to global AI opportunities, with Luxembourg, the US and Japan leading the redemptions. Gold funds logged a $317 mn inflow, the first positive reading after weeks of outflows.

In its Q1 FY27 earnings call, Tata Consultancy Services revealed it now bills AI‑led projects by outcomes, then phases clients into fixed‑price deals. The model lets TCS capture up to 15% AI‑driven savings and pass those productivity gains on to customers. The shift signals a broader re‑pricing of India's IT services industry.

Avenue Supermarts posted Q1 FY27 revenue of Rs 18,795 cr, up 14.8% YoY, and net profit rose 11.3% to Rs 860 cr. Faster store roll‑outs in tier‑II/III markets offset higher operating costs and slower sales at mature outlets, leaving margins under pressure.

The RBI reported foreign exchange reserves rose to $674 bn in the week to July 3, driven by a $4.5 bn gain in foreign‑currency assets and a $2.5 bn rise in gold holdings. The uptick follows a limited‑period scheme to attract FCNR(B) deposits and ECB swaps, hinting at renewed external funding streams that could bolster the rupee and give the central bank more policy wiggle room.

The June 16‑17 FOMC minutes show a near‑even split: some policymakers see a case for another rate hike if price pressures stay high, while others are comfortable holding rates steady. The split signals that tighter policy remains on the table, forcing markets to price renewed inflation risk.

A Mint poll of 18 economists pegs June retail inflation at 4.2%, the first breach of the RBI’s 4% medium‑term target under the new CPI series. The rise stems mainly from higher petrol‑diesel prices and a pick‑up in food costs, raising stakes for monetary policy decisions.

India and New Zealand elevated their relationship to a strategic partnership, unveiling a 2030 roadmap that targets doubling bilateral trade to ₹35,000 crore. The pact includes ten MoUs, naval logistics support and a maritime security dialogue, tightening defence ties across the Indo‑Pacific.

In its FY26 annual report, CEO Sashidhar Jagdishan said a review by US and Indian law firms cleared HDFC Bank of the allegations raised by former chairman Atanu Chakraborty after his sudden resignation. The firms found no evidence of the alleged mis‑selling or governance breaches, reinforcing the bank’s internal controls.

June saw net inflows of ₹28,973 crore into equity mutual funds, up 26% from May, despite overall industry outflows. Mid‑cap schemes attracted ₹6,090 crore and small‑caps ₹5,602 crore, confirming strong retail appetite for higher‑growth segments amid market volatility.

Indian‑origin petrol is reaching Russia through indirect traders after repeated attacks cripple Moscow’s refining capacity. The shift flips the classic exporter‑importer relationship, highlighting how sanctions and infrastructure damage are reshaping global fuel flows. Russia now buys Indian gasoline to keep its pumps running.

Escalating attacks on commercial ships have shattered a fragile US‑Iran understanding, reviving fears of a wider Gulf conflict. Tehran’s bid to expand influence over the Strait of Hormuz raises the risk of supply disruptions, keeping a risk premium baked into crude prices.