Brokerage firm Jefferies has made changes to its model portfolio by deploying the cash that it had tactically increased in early September.
Jefferies wrote in its note that it is deploying the cash as the near-term macro concerns are abating.
The 10-year treasury yields in the US have declined by 60 basis points since the recent peak. The US markets have also rallied after its CPI print was better than expectations, prompting speculation that the US Federal Reserve may be done with its current rate hiking cycle.
On-the-ground feedback to Jefferies also suggests that the performance of the Bharatiya Janata Party (BJP) in the ongoing state assembly polls may be better than the initial expectations.
Based on this, the brokerage has made some changes to its model portfolio and also explained the rationale behind these changes:
Maruti Replaced With Eicher Motors
Jefferies expects the Indian two-wheeler demand to grow at a faster pace compared to passenger vehicles over the next two years. Additionally, Eicher Motors has lagged the Nifty Auto index in 2023, gaining 19%,
compared to the 35% surge seen by the Auto index.Power Grid Replaced With NTPC
Although Jefferies calls terms both these stocks as attractive plays on India's power story, NTPC offers a higher EPS growth Compounded Annual Growth Rate (CAGR) of 10%, compared to Power Grid's 6%.
Marico Replaced With Honasa Consumer
Jefferies believes that Honasa, parent of Mamaearth caters to a much premium consumer, which is relatively un-impacted by inflation and the demand slowdown. Mamaearth shares are also up 84% from their post-listing lows and fundamentals are not the only reason behind the same.
You can read more on that here.Addition Of Coal India
Weightage Shift From NBFCs
Jefferies has reduced its weightage on Non-bank lenders as the rate cut cycle appears to be at least six months away. It has raised HDFC Bank to neutral and also added ICICI Prudential to the portfolio where valuations are attractive compared to others.
(Edited by : Hormaz Fatakia)
First Published: Nov 24, 2023 12:31 PM IST