Won't be surprised to see Indian market pause to refresh, says Jefferies' Christopher Wood

"The risk for all markets this year though is simply the tapering scare risk. It has been clear to me since last several months that the Federal Reserve is completely underestimating the massive pent-up demand potential that will be triggered if these vaccines prove effective and we come out of the epidemic."

"So the only thing that matters in financial markets in 2021, is how the Fed reacts when it becomes clear that they have underestimated the cyclical rebound. The bond market action you are seeing and the rise in inflation expectations is highlighting that the market is already beginning to think about this," he said.

Wood expects the US 10-year treasury yield to head to 2 percent.

He said, "I had been expecting a bond market sell-off and it is underway. We might have a period of consolidation but it would be quite easy to see the 10-year yield going to 2 percent. However to me it is all part of what we are seeing in equity markets in recent months and that is the rotation from growth stocks to cyclical value stocks and I am expecting that rotation to continue."