Chris Wood Launches Greed & Fear's Long-Only India Portfolio; Bets On Real Estate Stocks
Jefferies’ Chris Wood has launched a model India portfolio for only long-positions on equities, with the third-highest weight on property stocks, even as the nation’s equity benchmarks are trading near their record highs.
The market veteran in his Greed & Fear report said he would take the opportunity at the start of the new quarter to launch a long-only India model portfolio similar to the one that exists for Japan and China.
India, according to him, has always had a significant representation in Greed & Fear’s long-only Asia ex-Japan portfolio launched nearly 19 years ago but never had a dedicated one. That would change now because it would like to add more Indian stocks, which is not possible in the regional long-only portfolio. The idea, he said, is that long-only portfolios should be reasonably concentrated.
This new dedicated portfolio has been compiled in consultation with Mahesh Nandurkar, head of India research at Jefferies, and will start off with 16 stocks compared with the total 21 in the Asia ex-Japan long-only basket, Wood said, adding that much like the other Asian ones, it cannot own cash.
He acknowledged that this is not the perfect time to start an Indian portfolio since the Sensex is near its all-time high, but that’s the case with other stock markets as well.
'Start Of A New Housing Cycle'
The big call remains the property sector. “India is at the start of a new housing cycle after a seven-year downturn, after the mother of all consolidations in the developer industry, leading to a 17% weight in the property sector,” Wood said. Godrej Properties Ltd., Century Textiles Ltd. and DLF Ltd. are the three real estate stocks that are included.
This portfolio of Greed & Fear will be domestic demand focused but will have a decent energy weight to hedge, in part at least, the obvious risk of higher oil price on Indian financials and other interest rate sensitive sectors, Wood said, adding it remains bullish on oil.