HDFC Bank to replace HDFC in Chris Wood’s India portfolio, says Dalal Street held up by domestic flows

Jefferies’ global head of equity strategy has booted out Housing Development Finance Corporation (HDFC) to replace it with HDFC Bank in his India long-only equity portfolio. Wood has mirrored the trade for his Asia ex-Japan long-only portfolio. HDFC’s share price has fallen 16% so far this year while those of HDFC Bank have dropped 11%. With this move, The global market strategist has now upped HDFC Bank’s weightage in his India portfolio to 8%, the highest among financial stocks in the portfolio. 

“The investment in HDFC in the India long-only equity portfolio will also be removed and replaced by an investment in HDFC Bank. While the investment in ICICI Lombard General Insurance in the India long-only portfolio will be reduced by one percentage point with the money added to HDFC Bank,” Chris Wood said in his weekly Greed & Fear note. Now Wood has a 7% weightage to ICICI Bank, 8% to HDFC Bank, followed by a 4% exposure to State Bank of India (SBI). Further, ICICI Prudential Life Insurance and ICICI Lombard General Insurance have a 7% exposure each.

Talking about the overall Indian stock markets, Chris Wood said that Dalal Street continues to be held up by domestic flows while foreigners keep selling. Domestic equity mutual funds have recorded net inflows worth $19 billion in the first five months of 2022, while foreign investors have sold a net $23.4 billion of Indian equities year-to-date. “The risk in the domestic flows is that about half was accounted for by retail investors investing directly last fiscal year, as opposed to into funds,” he added. 

Earlier last month, Chris Wood had said that India’s growth story remains Asia’s best long-term structural story in terms of equities. He had then advised investors to accumulate their favourite Indian stocks on weakness. Chris Wood is overweight India.

In his portfolio, Chris Wood has exposure to Reliance Industries with 10% weightage and ONGC with another 10%. He has time and again reiterated his positive view on the real estate market and has Godrej Properties, Century Textiles, DLF, and Macrotech Developers in his portfolio,  Other constituents of the portfolio include Maruti Suzuki India, Larsen & Toubro, Jubilant FoodWorks, and Container Corp of India.

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