Jefferies increased the weightage of Reliance Industries in its model portfolio on Tuesday, October 6. The firm also added Kotak Mahindra Bank and Welspun Corp. "We also add Welspun Corp, which should benefit from a multi-year upcycle in oil & gas infra spending," Jefferies said, noting better valuations for largecaps.
While Jefferies has increased its weightage on Reliance Industries and included Kotak Mahindra Bank and Welspun Corp to its Model Portfolio, it has trimmed its weightage on interest rate sensitives, such as NBFCs and Real Estate, although it continues to remain "overweight" on both, and on Eicher Motors as well.
Global investment banking firm Jefferies has made some tweaks to its model portfolio as per its latest note on Tuesday, October 6, where it states that the risk-reward is becoming more favourable for largecap stocks in India due to better relative valuations compared to the broader markets.
Earnings growth gap between the two segments is also narrowing over financial year 2026-2028. As a result, it has increased its weightage among the largecap stocks, and made two new additions to the portfolio as well.
The weightage on Reliance Industries has been increased in the model portfolio, as Jefferies believes that at 8.4 times its one-year forward EV/EBITDA multiple, which is 23% lower than its 10-year average, the stock is trading at attractive valuations. Possibilities of earnings upgrades and higher Gross Refining Margins (GRMs) also prompted Jefferies to increase its weightage on the stock.
Reliance Industries will now command a 7.5% weightage in the Jefferies Model Portfolio.
Kotak Mahindra Bank is one of the two new additions to Jefferies' model portfolio on the back of a leadership overhang removal, and a potential growth acceleration from levels of just over 15%. Shares of the lender are trading at 1.8 times its price-to-average book value, which is a 50% discount to its 10-year historical average.
"We also add Welspun Corp, which should benefit from a multi-year upcycle in oil & gas infra spending in the US and West Asia, supported by local manufacturing," Jefferies wrote in its note. Shares of Welspun Corp have already more than tripled in value so far in 2026.
While Kotak Mahindra Bank will have a 2% weightage, Welspun Corp will have a 2.4% weightage in the model portfolio.
Jefferies wrote in its note that MSCI India is down 10% from its August peak, underperforming Emerging Markets by 14 percentage points, largely on fears of higher interest rates, thereby bringing its valuations below long-term averages.
"While Indian yield gap with the US is at 20-year lows, inflation gap is also lower. Unlike 2022, this should be a shallower rate hike cycle given that the real rates are still positive in India", Jefferies wrote, adding that largecap stocks, which are below their average valuations, may offer "hiding places" to investors.
While Jefferies has increased its weightage on Reliance Industries and included Kotak Mahindra Bank and Welspun Corp to its Model Portfolio, it has trimmed its weightage on interest rate sensitives, such as NBFCs and Real Estate, although it continues to remain "overweight" on both, and on Eicher Motors as well.