Indian insurance sector remains one of Asia’s better long-term growth stories, says Jefferies

Still, in the case of SBI Life and HDFC Life, they are still up 15 percent and 11 percent, respectively since inclusion in the portfolio in July and September 2019, respectively, the report stated.

In September 2019, Wood had bought SBI Life Insurance and HDFC Life Insurance, which now account for 5 percent and 4 percent weight in the portfolio.

"As for the budget itself, while the stated intention to remove all deductions, in the long run, is a positive in terms of a general principle, in this case, the changes have only served to make the tax system more complicated, not less. This is because taxpayers face the choice of either taking the cuts in personal income tax rates or opting to maintain the deductions. Apparently, for many, it will make financial sense to keep the deductions. It should also always be remembered that only 3.3 crore Indians pay income tax out of an adult population of 100 crore," the report explained.

Jefferies has also maintained a ‘reduced overweight’ rating on India in his ex-Japan portfolio for long-only investors. The rating comes after the presentation of the Union Budget on February 1, which according to him, lacked measures to prop-up the economy.

“Amidst the relative lack of urgency on economic policy, a cynic might wonder whether the Modi government might have decided to concentrate primarily on its social ‘majoritarian’ policy, which is popular with the Hindu majority. Hopefully, this is not the case though it is clearly a growing risk, most particularly given the lack of credible opposition to the BJP government at the national level,” Wood said.

The report also said that the divestment target for the financial year 2020-21 (FY21) is ambitious. Another negative in the Budget was the lack of detail on how to address the issue of 1,500 ‘stuck’ residential property projects, it added.

Wood further noted that the proposals also did not help the mortgage sector much, where there had been hopes of an increase in tax deductions, and also no help for the struggling auto sector where motor vehicle sales were down 14 percent year-on-year in 2019.