Jefferies include Zomato, SBI Life to long-only portfolios, drops HDFC Life

SBI Life Insurance and the food delivery service Zomato have both been added by Jefferies to one of their long-only portfolios. These adjustments were made by removing the stocks of HDFC Life and Standard Chartered as well as reducing back on investments in JD.com and Alibaba.

Christopher Wood, the global head of equities at Jefferies, discussed the modifications made to the long-only and Asia Pacific ex-Japan relative-return portfolios in his weekly Greed & Fear newsletter.

In the newsletter headlined "Modi and the champagne socialists," he stated that "the investments in HDFC Life Insurance and Standard Chartered in the Asia ex-Japan long-only portfolio will be removed and replaced by investments in SBI Life Insurance and India's online food delivery platform Zomato."

The newsletter's primary focus was the heightened optimism around India and the possible causes of it.

According to the newsletter, Jefferies will add Zomato to the India long-only portfolio with a 4% weighting and cut its holding in HDFC Life Insurance. "By reducing the investment in Oil & Natural Gas Corp, the investment in REC Limited will increase by two percentage points," it continued.

Additionally, Zomato will be included in the global long-only equities portfolio. According to the Greed & Fear newsletter, this addition will be "paid for by reducing the investments in JD.com and Alibaba by two percentage points each."

According to Wood, "India's delightfully noisy financial media" continues to be fascinated by the Sensex's potential to reach 100,000.

As previously noted (see GREED & FEAR - India and a 100,000 Sensex, 3 February 2022): "This aim, on a five-year view, currently assumes trend EPS growth of 15% and that a five-year average one year forward PE multiple of 19.8x is maintained. The Indian stock market will continue to climb the classic "wall of concern," he added, "still like all long-term bull markets.

Wood wrote about two risks he believes will arise soon. "A clear concern over the upcoming 12 months is that the prevailing consensus, namely that (PM Narendra) Modi will be re-elected, will inevitably be questioned. Another risk is a subsequent decline in retail investor activity after a time when the stock market has traded in a narrow range. From a peak of 38 million in June 2022 to 31 million in April 2023, active brokerage accounts have decreased, he continued.