Concerns easing, Jefferies backs cash bets in equities

Brokerage Jefferies has recommended deploying cash into equities on the grounds that concerns over higher US yields, rising oil prices and state election results have subsided.

The firm said it has added Coal India, Honasa Consumer, Eicher Motors, NTPC, HDFC Bank and ICICI Prudential Life in its model India portfolio in place of cash, NBFCs, Marico, Maruti Suzuki and Power Grid Corp.

"Our conviction on capex cycle theme continues unabated with a specific focus on housing, power sector among other industrial sectors," said Jefferies' analysts in a note to clients.


The brokerage said opinion polls and on-the-ground feedback suggest that the BJP's performance in the upcoming state elections may be better than initial expectations.

"If it is true, the market might see a bounce after the results announcement on the December 3," said Jefferies.

The firm said it has reduced weight on NBFCs as the rate cut cycle seems to be at least six months away. "The recent RBI action raising risk weight on NBFC loans / unsecured retail credit drives our weight reduction Bajaj Finance and Chola," it said. "We raise HDFC Bank to neutral and also add ICICI Pru Life where valuations appear attractive relative to others."