Global brokerage Jefferies has reshuffled its India long-only equity portfolio, exiting HDFC Bank, PB Fintech, and REC. The firm added MCX, Lenskart Solutions, and Bajaj Finance, citing strong domestic credit growth and renewed foreign inflows. Each new entrant now holds a 4% portfolio allocation, while the firm increased its exposure to Eternal and reduced its stake in Bharti Airtel.
Global brokerage Jefferies has announced major changes to its India long-only equity portfolio. The firm has shifted its investment strategy, exiting positions in HDFC Bank, digital insurance aggregator PB Fintech, and state-owned power financier REC. These exits mark a significant departure from these stocks, which were previously part of the firm's core holdings.
In place of these exits, the brokerage has added three new companies: Multi Commodity Exchange of India (MCX), eyewear retailer Lenskart Solutions, and financial services major Bajaj Finance. These new entrants have each been given a 4% allocation within the portfolio. Additionally, the firm increased its weighting in the entity known as Eternal by one percentage point, while reducing its holding in Bharti Airtel to balance the portfolio.
The strategic shift is driven by a more optimistic outlook on India's domestic growth. Jefferies pointed to strong credit growth, noting that bank lending has expanded by 17-18% year-on-year. This surge in credit, particularly in the corporate and retail segments, serves as a primary driver for the firm's renewed confidence in the local economy. The brokerage expects that sectors linked to consumption and financial services will benefit as the Indian economy continues to show resilience amid global fluctuations.
Investors should note the specific nature of these new additions. Bajaj Finance is a well-established player in the non-banking financial services space, while MCX operates the country's largest commodity derivatives exchange. Lenskart Solutions, meanwhile, is an eyewear retailer currently preparing for a potential initial public offering. Adding an unlisted company to an equity portfolio is a specific strategy that indicates the brokerage's long-term conviction in the company’s business model and growth path leading up to its public listing.
The decision to rebalance also reflects a response to shifting capital flows. India has seen a return of foreign institutional interest, with recent monthly data showing billions of dollars in net equity inflows. This has helped stabilize the rupee and provided a more supportive environment for domestic stocks. The brokerage’s move to increase exposure to companies that benefit from domestic spending, like Lenskart and Bajaj Finance, aligns with the broader theme of capitalizing on India's internal consumption story.
However, this strategy comes with its own set of monitorables for investors. The performance of these picks remains subject to general market volatility and sector-specific risks. Financial services companies are sensitive to interest rate cycles and asset quality, while consumer-facing businesses like Lenskart face competition and the execution risks associated with scaling operations. Furthermore, the reliance on sustained foreign inflows means that any change in global macro conditions could affect the portfolio's performance. Investors may track credit growth numbers, quarterly financial results of these entities, and any management commentary regarding future expansion or IPO timelines to understand how these portfolio changes impact long-term value.