Jefferies is tweaking its India investment approach. The brokerage has reshuffled its India focused long-only equity portfolio, dropping HDFC Bank and PolicyBazaar while adding Multi Commodity Exchange of India (MCX) and Lenskart Solutions.
It has also replaced REC with Bajaj Finance and increased its allocation to Eternal, while trimming Bharti Airtel. The changes come as foreign flows show some improvement and domestic indicators, particularly bank credit growth, remain firm.
But what is driving Jefferies latest stock picks and why are MCX, Lenskart and Bajaj Finance finding a place in the portfolio now? Let’s take a look –
Foreign flows show a turnaround
Foreign investors have remained heavy sellers of Indian equities in 2026. According to Jefferies report, net foreign selling stood at$25.4 billion so far this year.
July, however, brought a change in direction. India recorded $2.45 billion of net foreign buying during the month as the unwinding of the “memory trade” supported equity inflows.
So, is the pressure from foreign investors easing?
Jefferies believes there are other signs that could support the domestic market.
Bank credit growth hits a multi-year high
One of the biggest positives highlighted by the brokerage in its report is the acceleration in bank credit growth.
As per the brokerage house report, bank credit is now growing at around 17-18% year-on-year (YoY), the strongest pace in more than a decade.
Corporate lending is leading the increase, with growth reaching around 20% YoY. Agricultural loans are growing 17%, while retail credit is expanding 16%.
The brokerage also pointed to healthy demand for automobiles and property as another positive for the domestic economy.
Why are MCX and Lenskart entering the portfolio?
Jefferies is changing its stock preferences.
HDFC Bank and PolicyBazaar are being replaced by MCX and Lenskart Solutions in the India long-only portfolio.
Jefferies’ latest research on MCX is also part of the reasoning behind the move. The brokerage’s June 2026 quarterly results report highlighted “Product & Penetration Opportunities” as factors supporting its view on the exchange.
Lenskart, meanwhile, gives the portfolio exposure to India’s growing organised eyewear market.
The brokerage is also removing REC and adding Bajaj Finance.
REC has gained 228% in rupee terms since it was added to the portfolio in December 2022.
Bajaj Finance, meanwhile, has gained 49% since it was removed from the portfolio in January 2024. Before that, Jefferies had held the stock in its Asia ex-Japan long-only portfolio for five years, from May 2015 to March 2020, during which it gained 551%.
Eternal gets a bigger allocation
Jefferies is increasing its allocation to Eternal by one percentage point. The additional weight will come from a reduction in its investment in Bharti Airtel.
Rupee gets some support from foreign inflows
The Reserve Bank of India (RBI) introduced a scheme in June to encourage fresh Foreign Currency Non-Resident Bank (FCNR-B) deposits from non-resident Indians (NRIs).
Jefferies said the scheme has already attracted US$41 billion. It expects inflows to rise to$80-100 billion by the time the facility ends.
The brokerage also pointed to tax changes for foreign investors holding Indian government bonds. Since the start of June, these bonds have attracted US$8.7 billion of net inflows.
What does this mean for the rupee and rates?
The combination of stronger foreign currency inflows and bond buying could help reduce pressure on the rupee.
The rupee had fallen to 96.96 against the US dollar in May but had recovered to around 95.17, according to the report.
On monetary policy, the Reserve Bank of India kept its policy rate unchanged for the fourth consecutive meeting and retained its neutral stance.
Jefferies expects only one 25-basis-point rate hike during the current tightening cycle.
For investors, the bigger takeaway is the change in stock preferences. Jefferies is moving money towards MCX, Lenskart and Bajaj Finance while increasing its exposure to Eternal, even as it cuts or exits some of its earlier holdings.
Disclaimer: The stock movements, portfolio adjustments, and brokerage views cited in this report are for informational and educational purposes only and do not constitute direct investment advice, an endorsement, or an offer or solicitation to buy, sell, or hold any security. Market investments are subject to market risks, and historical performance or institutional reshuffles are not indicative of future results. Readers should conduct independent research and consult a SEBI-registered financial advisor or qualified financial planner before making any investment decisions based on these market developments. This disclaimer has been generated using AI to support user well-being and responsible content consumption.