Christopher Wood, the widely followed global head of equity strategy at Jefferies, has made key changes to his "Greed & Fear" long-only portfolio for India, signalling increased caution around midcap stocks. The strategist has expressed concerns over stretched valuations in the midcap space and moved towards a more defensive stance, favouring quality consumption-oriented stocks.
According to the latest report, Wood has added InterGlobe Aviation (IndiGo) to the portfolio, while reducing exposure to companies like Thermax, Godrej Properties, and Coal India. He also trimmed positions in Manappuram Finance and Home First Finance, citing growing risks in the broader midcap segment.
The changes come at a time when India's midcap stocks have shown signs of underperformance amid high valuations, macroeconomic uncertainties, and profit-booking by institutional investors. Although the Indian equity market remains one of the top-performing emerging markets globally, midcap volatility has increased, prompting strategic adjustments.
Among the key stocks impacted by the portfolio reshuffle:
Manappuram Finance is currently trading in the range of ₹265–₹270. While it maintains a price-to-earnings (P/E) ratio of around 19 and a dividend yield of approximately 1.3 percent, it has experienced price pressure in recent sessions.
Home First Finance, another midcap financial services player, has seen a dip of nearly 2.3 percent, trading at approximately ₹1,280. However, analysts continue to view it as fundamentally strong with a return on equity (ROE) near 16 percent and consistent growth metrics.
Godrej Properties, which saw a reduction in allocation, is trading around ₹2,420. Despite the cut, market analysts remain bullish with an average price target of ₹2,811, representing an upside of nearly 30 percent from current levels. The stock is trading below the sector average P/E, offering value potential in the long term.
Thermax shares have been volatile, recently hovering near ₹3,535. Jefferies' decision to cut back on the stock aligns with a cautious view on capital goods amid global economic headwinds. Still, several brokerages have price targets in the ₹3,500–₹3,900 range, suggesting optimism for select investors.
Meanwhile, IndiGo's inclusion in the portfolio reflects Wood’s confidence in India’s consumption-led growth and resilience in the aviation sector. The airline has shown strong financial performance and benefits from rising domestic travel demand.
The portfolio reshuffle mirrors a broader shift in investment strategy among global investors who are increasingly favouring large-cap and defensively positioned companies. With global inflation pressures, potential interest rate shifts, and geopolitical developments in play, analysts expect continued volatility in the midcap segment.
Wood's actions serve as a cautionary signal for investors heavily exposed to India’s midcap stocks. While long-term fundamentals for many of these companies remain intact, near-term valuations and sentiment-driven moves warrant a more balanced and risk-aware approach to portfolio construction.