'Tactically cautious about Indian market'

The US Federal Reserve (US Fed) surprised the global financial markets with a higher-than-expected rate cut of 50 basis points (bps) on Wednesday. CHRISTOPHER WOOD, global head of equity strategy at Jefferies, spoke with Puneet Wadhwa in New Delhi to share his interpretation of the Fed's move, its implications for global markets, and his stand on Indian equities. Edited excerpts:

What's your reaction to the rate cut and the commentary by the US Fed?

I'm surprised the US Fed cut rates by 50 basis points. The language and the data going into the Fed meeting suggested that the cut would be 25 bps.

Will the quantum of cuts be similar in the meetings ahead? Is 50 the new 25?

No, I don't think they raised expectations of a 50-bp cut in the next meeting. They raised expectations of 25 bps by the end of the year. The bottom line is that I'm surprised they cut rates by 50 bps. Some people will argue that it means that the US Fed thinks the economy is much weaker, but actually, that's not what they said. In the absence of any other explanation, I think at the margin, the rate cut must be influenced by political compulsions.

How do you see global markets play out from here on, especially in India?