The Indian stock market has witnessed a decent rally since the early April lows. This uptrend has been significantly aided by the dovish stance of the Reserve Bank of India (RBI), with Governor Malhotra taking supportive measures that have boosted Indian markets in recent times. According to Mahesh Nandurkar, head of India research at Jefferies, there is a strong possibility that the RBI may cut rates by another 25 basis points by the end of this year, providing further impetus to the markets.
GREED & fear has also received predictions suggesting a larger quantum of rate cuts, with the possibility of another 50 basis points of cuts next year. If this materializes, the policy rate would drop to 4.75%. This expectation aligns with the recent slowdown in credit growth, which decelerated from 16.6% year-on-year (YoY) in February 2024 to 9.0% YoY at the end of May 2025, making the rate cut projections quite reasonable.
However, the strong market rally has also triggered concerns over valuations. The Nifty Index is now trading at 22.2 times its 12-month forward earnings, after rising by 14.1% from its April 7 lows. The Nifty Mid-Cap 100 Index has seen an even sharper movement, trading at 27.1 times 12-month forward earnings following a 23.7% gain from its April 7 low. The mid-cap valuations are becoming particularly concerning due to their sharp rise within a short period.
Following the budget announcement on February 1, there has been a noticeable shift in focus within the Indian stock market. The attention has rotated towards consumption themes rather than investment-led opportunities. This rotation reflects a tactical repositioning by investors aiming to benefit from rising domestic consumption trends.
GREED & fear has also expressed optimism regarding the real estate sector. The Indian property market, now in its fifth consecutive year of an upturn, is expected to sustain its growth momentum. Jefferies forecasts that the pre-sales growth of the top seven property developers they cover will accelerate to 22% YoY in FY26. This would mark a significant rebound from the 17% YoY growth recorded in FY25, which was a four-year low. The expectation of lower mortgage rates is also anticipated to provide a boost, particularly in the affordable and mid-income housing segments, making home ownership more accessible.
Currently, the GREED & fear India long-only portfolio has a 19% weighting in property developers, reflecting their strong confidence in the sector's continued growth potential. However, to align with evolving market dynamics and to capitalize on emerging opportunities, GREED & fear has decided to make several adjustments in its India portfolio this week.
As part of the reshuffle, investments in companies such as Larsen & Toubro (L&T), Thermax, and Godrej Properties will be removed. The freed-up capital will be redeployed into new additions. TVS Motor, Home First Finance, and Manappuram Finance will each receive a fresh allocation of four percentage points, signaling strong confidence in these businesses across different sectors of the Indian economy. Furthermore, an additional one percentage point each will be added to existing investments in PolicyBazaar and Bharti Airtel, indicating increased confidence in the long-term prospects of these firms as well.
In summary, Jefferies’ Chris Wood, through GREED & fear, is strategically recalibrating the India portfolio based on anticipated rate cuts, emerging valuation concerns, sectoral growth prospects, and evolving consumption patterns. This comprehensive adjustment reflects a tactical yet optimistic outlook on India’s growth trajectory while carefully balancing risk and opportunity across sectors.
Disclaimer:
The information provided in this article is for informational purposes only and should not be considered as financial advice or investment recommendations. Readers are advised to conduct their own research or consult a qualified financial advisor before making any investment decisions. The views expressed are based on current market conditions, which are subject to change.
