In its latest report, Jefferies expressed a cautious outlook on the markets in the near term, citing concerns over unsustainable domestic flows and a marginal shift toward populist policies by the government. The brokerage firm also included Emcure Pharma and IndiGo in its model portfolio and increased its weighting on HDFC Bank.
The increased weighting on India's largest lender, HDFC Bank, comes as analysts anticipate that banking stocks are approaching an inflection point. However, Jefferies has lowered its weighting on Reliance Industries and Amber, and replaced L&T with Siemens, assigning a lower weight to the latter.
ALSO READ: Jefferies flags geopolitical risks as the biggest near-term threat to markets
Sectorally, Jefferies shared a 'neutral' stance on industrials, 'underweight' on energy, 'overweight' on telecom, autos, staples, and power. They kept long-term view on capex cycle unchanged.
Additionally, the brokerage firm said that they remain bullish on industrials and global cyclicals given green shoots visible in the consumption theme.
In an earlier Greed & Fear report, Jefferies highlighted that market focus will be on shifts in monetary policy and the outcome of the US presidential election. The firm identified geopolitical tensions as the most significant near-term risk.
Jefferies noted, "The next two months leading up to the November election are particularly risky, especially if the polls remain tight." They pointed to ongoing tensions in Ukraine, rising instability in the Middle East, and the potential for further escalation before the US elections as key wildcards for the markets.
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