Jefferies’ Christopher Wood Bets Big On 3 New Stocks; Dumps HDFC Bank, PB Fintech

Jefferies strategist Christopher Wood has reshuffled his India long-only portfolio, removing HDFC Bank and PB Fintech while adding Multi Commodity Exchange of India (MCX) and Lenskart Solutions, Business Standard reported, citing the latest edition of his GREED & fear note. Wood has also replaced REC with Bajaj Finance.

The changes come as foreign investors begin returning to Indian equities after four consecutive months of net selling.

Wood estimated that overseas investors made net purchases of around $2.45 billion in Indian equities in July, although reported inflow figures vary across market trackers depending on their methodology and cut-off dates.

Wood attributed part of the shift to investors unwinding positions in the technology-focused "memory trade" and redirecting capital away from crowded artificial intelligence and semiconductor plays.

MCX, Lenskart Get 4% Allocation

MCX, Lenskart and Bajaj Finance have each been assigned a 4% weight in Wood's revised portfolio.

The strategist also raised the allocation to Eternal by one percentage point to 5%, while cutting Bharti Airtel's weighting to 4%.

Financial stocks remain the portfolio's largest sectoral exposure, accounting for 26% of the overall allocation. SBI Life Insurance, Adani Ports and GMR Airports are the three largest individual positions, with each carrying a 6% weight.

The portfolio is benchmarked against the MSCI India index. Other holdings include ICICI Bank, State Bank of India, Tata Capital, Cholamandalam Investment and Finance, JSW Energy, Adani Energy Solutions, DLF, Lodha Developers, IndiGo and TVS Motor.

Credit Growth Remains Strong

Wood remains positive on India's domestic demand backdrop, citing robust credit expansion and healthy automobile and real estate demand as key supports for equities.

RBI data showed bank credit grew 17.7% year-on-year during the fortnight ended July 15, moderating from 18.6% in the previous two-week period.

Corporate credit growth was estimated at around 20%, ahead of the roughly 17% expansion in agricultural lending and 16% growth in retail credit, according to Wood.

FCNR Inflows Could Rise Further

Wood also highlighted India's efforts to strengthen foreign-exchange liquidity through the RBI's special window for new three- to five-year FCNR(B) deposits.

Official figures showed the facility had attracted $36.7 billion by July 31. Wood estimated the total inflow at around $41 billion and projected that it could reach $80-100 billion over the following two months.

He noted that some non-resident Indians were reportedly using significant leverage to target dollar-denominated returns.

However, such strategies involve substantial risks and should not be interpreted as implying a sovereign guarantee of the returns.

The RBI facility provides participating banks with relief on foreign-exchange hedging costs and certain regulatory concessions for eligible deposits.

Bond Inflows in Focus

Wood also pointed to the government's decision to remove taxes on interest and capital gains from Indian sovereign debt for certain overseas investors.

He expects the move to encourage additional foreign participation in India's debt markets and remains positive on Indian government bonds.