DLF, RIL, Zomato, MakeMyTrip: Chris Wood of Jefferies rejigs India exposure

Christopher Wood, global head of equity strategy at Jefferies has rejigged is Asia ex-Japan long-only portfolio and removed his investment in Godrej Properties, while the investment in Macrotech Developers has been increased by one percentage point to 4 per cent. 

 

"An investment in another Indian property company DLF Limited will be introduced with a 3 per cent weight. An investment in Indian online travel company MakeMyTrip will be introduced with a 4 per cent weight by removing the investment in Axis Bank. The investment in Zomato will be increased by one percentage point by reducing the weighting in TSMC," Wood wrote in his weekly note to investors, GREED & fear. 

 

 

In the India long-only portfolio, Wood has increased his investment in Reliance Industries (RIL) by two percentage points, which will be paid for by shaving the investments in HDFC Bank and State Bank of India (SBI) by one percentage point each.

 

As for the global long-only equity portfolio, Wood has bought into MakeMyTrip by removing the investment in Axis Bank. The investment in Godrej Properties will also be removed, he said, and will be replaced by an investment in Macrotech Developers.  CLICK HERE for Wood's full list of India stock portfolio

 

Indian stock markets, meanwhile, have staged a smart recovery from their recent lows with the Nifty 50 index rising 6.6 per cent to nearly 23,600 levels. Among sectors, public sector stocks staged a smart comeback with the Nifty CPSE index, a gauge of performance of central public sector enterprises on the NSE moving up 14 per cent during this period.

 

Energy, commodity, metal, PSU banks, infrastructure, oil & gas and realty indices, too, did well on the NSE with their benchmark indexes surging 8 per cent to 12 per cent thus far in March, ACE Equity data shows.

 

Sell US, buy emerging markets

 

At a broader level, meanwhile, Wood suggested investors sell rallies in the US stocks and increase exposure elsewhere, most particularly Europe, China and emerging market equities in general. He feels that the allocation out of the US has only really just begun.

 

"US remains comparatively expensive while US earnings growth continues to deteriorate at a time when Europe, China and even Japan are all experiencing positive earnings revisions. As for the recent confirmation of auto tariffs also due to be implemented on April 2, 25 per cent is higher than expected. The implications are clearly bearish for an auto industry already facing an existential crisis, and particularly negative for Japan," Wood wrote.

 

Besides Wood, other global fund managers, too, are cutting their exposure to US equities, according to a recent BofA Securities fund manager survey for March. Fund managers’ allocation to US stocks dipped to nearly 23 per cent underweight, the lowest since June 2023, BofA said.  

 

A net 44 per cent of global fund managers surveyed by BofA Securities in March said they expected global growth to deteriorate, rising sharply from the previous month.

 

“US equity allocation dropped 40 percentage points (ppt) in March, the biggest monthly decline on record. The current allocation is 1 standard deviation below its long-term average. Allocation to euro zone equities jumped 27ppt month-on-month (MoM) to net 39 per cent overweight, the highest since June 2021. Fund managers are 20 per cent overweight in EM stocks, up 20ppt MoM," BofA Securities said. 

 

A total 205 panelists with $477 billion worth of assets under management (AUM) had participated in the March survey, BofA said. 171 participants with $426 billion AUM responded to the Global FMS questions and 107 participants with $193 billion AUM responded to the Regional FMS questions.