Jefferies' Chris Wood sells HDFC Bank, PB Fintech shares to buy 2 new stocks

Jefferies’ Global Head of Equity Strategy and emerging markets bull Christopher Wood is removing HDFC Bank and PB Fintech’s PolicyBazaar from his India long-only model portfolio, replacing them with Multi Commodity Exchange of India (MCX) and Lenskart Solutions in a shift toward exchange infrastructure and retail.

“The investments in HDFC Bank and PolicyBazaar will be removed and replaced by investments in Multi Commodity Exchange of India (MCX) and eyewear retailer Lenskart Solutions,” Wood wrote in his GREED & fear report.

MCX and Lenskart will each carry a 4% weighting in the portfolio, which is benchmarked against the MSCI India Index. Wood is making a broader portfolio reset alongside the two headline changes. REC will be dropped and replaced with Bajaj Finance at a 4% weight. The allocation to Eternal, formerly Zomato, will rise by one percentage point to 5%, funded by cutting Bharti Airtel’s weight by the same amount to 4%.


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The REC exit follows a 228% gain in rupee terms since the stock was added in December 2022. Bajaj Finance, meanwhile, has advanced 49% since Wood removed it from the portfolio in January 2024.

The lender has a longer history in Wood’s allocations. It was held in the GREED & fear Asia ex-Japan long-only portfolio for nearly five years between May 2015 and March 2020, gaining 551% during that period.

The reshuffle comes against a mixed backdrop for Indian equities. Overseas investors bought a net $2.45 billion of Indian stocks in July, though net foreign selling for the year remains at $25.4 billion, according to the report.

Domestic indicators have been more supportive. Indian bank credit growth has accelerated to 17%-18% from a year earlier, its fastest pace in more than a decade. Corporate lending is expanding at 20%, compared with 17% growth in agricultural loans and 16% in retail credit. Wood also cited healthy automobile and property demand.

Capital inflows are offering another potential buffer. A Reserve Bank of India program designed to attract foreign currency deposits from NRIs had generated $41 billion through July and is expected to raise $80 billion to $100 billion by the time it ends. Foreign investors have also put a net $8.7 billion into Indian government bonds since the start of June following a change in taxation.

Those flows increase the likelihood that the rupee will stabilize, according to Wood. The currency was at 95.17 per dollar after reaching 96.96 in May.

The RBI left its policy rate unchanged for a fourth consecutive meeting and retained a neutral stance. Jefferies’ India research head Mahesh Nandurkar expects only one quarter-point increase during the current tightening cycle.

The revised portfolio assigns its largest individual weights of 6% each to SBI Life Insurance, Adani Ports & Special Economic Zone and GMR Airports. The model portfolio, launched in July 2021, targets outperformance over a one-year horizon and long-term absolute returns.