Christopher Wood, the Global Head of Equity Strategy at Jefferies, has raised the valuation concern in India, especially in midcaps. In the backdrop of the RBI easing interest rates and enabling the liquidity push. Wood has made key changes to some Indian stocks in his long-only India portfolio. He has reduced exposure to some big names and turned his focus toward consumption led growth and retail financial services.
According to the latest GREED & fear report, the key changes in the India portfolio is as follows-
What is in: The 5 stocks that Chris Wood is backing
Wood has added 3 new stocks in the portfolio and added 1% weightage each to 2 existing ones- As per the report, TVS Motor, Home First Finance, and Manappuram Finance have each received a 4% point allocation, while Policybazaar and Airtel received an additional 1 percentage point each.
- TVS Motor (new – 4% allocation)
- Home First Finance (new – 4% allocation)
- Manappuram Finance (new – 4% allocation)
- Policybazaar (PB Fintech) (existing – increased by 1%)
- Bharti Airtel (existing – increased by 1%)
Policybazaar also appears in the Asia ex-Japan portfolio replacing L&T.
What is out: Exit from capex and real estate heavyweights
As per the report, Wood has removed three key stocks from his India long-only portfolio. This includes –
- Larsen & Toubro (L&T)
- Thermax
- Godrej Properties
The decision to remove these stocks was majorly driven by valuation concerns and changing sector preferences. The report also highlights that Godrej Properties exit marks a trimming of real estate exposure despite a still-positive outlook on the sector.
Jefferies: Real estate still on the radar, but selectively
Although he replaced Godrej Properties in the India portfolio, Wood has not completely written off Indian real estate. The GREED & fear report states that the sector is in its fifth year of an upcycle, with more room to grow, especially in the mid-income and affordable housing segments.
According to Jefferies India property analyst Abhinav Sinha, the top 7 developers are expected to grow pre-sales by 22% YoY in FY26, up from a 17% slowdown in FY25.
“Residential units priced above Rs 1.5 crore accounted for 31% of new launches last year, up from just 9% in 2020,” the report noted.
Stocks like Macrotech Developers and DLF, still present in Jefferies broader portfolios.
Why the change in stance by Chris Wood? RBI’s sudden rate cut plays a key role
One of the driving forces behind this portfolio reshuffle is India’s monetary policy pivot. The RBI’s unexpected 50 basis point repo rate cut to 5.5% in early June and a reduction in CRR by 100 bps have surprised the market and changed the investment calculus.
According to Jefferies India research head Mahesh Nandurkar, another 25 bps cut could be on the cards before year end, and possibly more next year.
As per the GREED & fear note, “The central bank surprised the market on 6 June with a 50bp cut in the policy repo rate to 5.5%, taking advantage of the weak US dollar backdrop.”
Jefferies: Impact on geopolitics, oil, and dollar
Outside India, Wood’s note also touches on broader market themes, particularly the Middle East conflict and its muted impact on global markets. Despite US airstrikes on Iran’s nuclear sites, markets have not seen a full blown panic.
As GREED & fear puts it, “Markets have been increasingly assuming that Iran is a paper tiger given its seeming failure so far to respond effectively to Israel’s aggression.”