{"id":70220,"date":"2025-08-15T12:42:16","date_gmt":"2025-08-15T12:42:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/70220\/"},"modified":"2025-08-15T12:42:16","modified_gmt":"2025-08-15T12:42:16","slug":"jefferies-predicts-a-brief-recovery-for-indian-stock-markets-lists-8-top-conviction-picks","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/70220\/","title":{"rendered":"Jefferies predicts a brief recovery for Indian stock markets; lists 8 top conviction picks"},"content":{"rendered":"

Indian equities may be set for a brief recovery, with Jefferies arguing that stronger domestic inflows, a likely surge in September-quarter earnings, and easing U.S.\u2013India trade frictions could nudge the Sensex and Nifty <\/a>higher in the near term. Jefferies cautioned, however, that questions around sustainability remain, given an unfavourable value-vs-growth setup and looming equity supply.<\/p>\n

To position for the potential bounce, Jefferies highlighted a basket of stocks it believes can benefit from improving flows and earnings visibility: Lodha <\/a>(Macrotech Developers), Cholamandalam<\/a>, Adani Energy<\/a>, Shriram Finance<\/a>, Jubilant FoodWorks, Mankind Pharma, NTPC, and Crompton Greaves Consumer Electricals. In addition, Jefferies reiterated its \u201chigh conviction\u201d stance on the cement space, citing a pricing-led recovery that can support margins and earnings despite cost variability.<\/p>\n

Furthermore, Jefferies also pointed out that the MSCI India Index has trailed the MSCI Emerging Markets Index by 24 percentage points over the past 12 months\u2014the widest gap in 15 years. According to Jefferies, history suggests that after such stretches of 15\u201320% (or more) relative underperformance, India typically enjoys a period of catch-up. The house believes that set-up\u2014combined with supportive domestic flows\u2014makes a short-lived rebound plausible.<\/p>\n

Valuations<\/p>\n

On the valuation front, Jefferies noted that India\u2019s premium to EM peers, which had spiked to about 90% in March\u2013April, has rolled back to its 10-year average near 63%. While MSCI India\u2019s forward P\/E is still roughly 10% above its long-term mean, Jefferies highlighted that broader gauges\u2014especially the bond-yield to earnings-yield gap\u2014have reverted to historical norms. In Jefferies\u2019 view, this reset removes a key overhang and gives room for a tactical upswing even if long-term multiples remain full.<\/p>\n

Doemstic and Foreign investors<\/p>\n

Jefferies underscored the pivotal role of local investors. Equity mutual fund inflows jumped 75% month-on-month to $6.4 billion in July\u2014more than double the April\u2013June monthly average. Beyond MFs, other domestic institutions (insurers, ETFs and AIFs) have been consistent net buyers, averaging $2.8 billion per month this year versus $1.6 billion in 2024. Jefferies called these flows \u201ca big downside protection and a sentiment booster,\u201d noting they help counterbalance intermittent foreign selling pressure.<\/p>\n

Moreover, Jefferies also stated foreign portfolio investors\u2019 India weights sit near decade lows. Large EM funds are just 0.2 percentage points overweight India versus the benchmark\u2014well below the ~2.5-point long-term average and far from peaks above 4 points. Jefferies argued that even a modest shift back toward average positioning could add incremental fuel to any near-term bounce.<\/p>\n

September-quarter earnings could deliver a pop<\/p>\n

Jefferies expects a visible earnings pickup in the September quarter. The brokerage attributed this to a low base (last year\u2019s election-related slowdown in government spending) and an earlier Diwali this year, which can pull forward festive demand into Q2. Jefferies added that while these seasonal and base effects should aid prints in the near term, they are likely to fade in the December quarter.<\/p>\n

But the rally may be short-lived\u2026<\/p>\n

Despite the constructive near-term setup, Jefferies warned that the bounce may be fleeting. The brokerage pointed to an unfavourable value-vs-growth equation\u2014where premium growth names remain rich relative to value\u2014and to concerns over equity supply that could absorb liquidity. In Jefferies\u2019 assessment, these factors cap the runway for a sustained re-rating unless global risk appetite and foreign participation improve meaningfully.<\/p>\n

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"Indian equities may be set for a brief recovery, with Jefferies arguing that stronger domestic inflows, a likely…\n","protected":false},"author":2,"featured_media":70221,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[55367,64,63,99,55365,55373,55378,55364,55366,55362,55372,55371,55361,55370,55369,55375,55368,55376,171,55363,55377,55374,6711,43783],"class_list":["post-70220","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-adani-energy","tag-au","tag-australia","tag-business","tag-cement-sector-recovery","tag-cholamandalam","tag-crompton-greaves-consumer-electricals","tag-domestic-inflows-boost","tag-foreign-investor-positioning","tag-indian-equities-rally","tag-indian-stock-markets","tag-jefferies-conviction-picks","tag-jefferies-india-market-outlook","tag-jefferies-top-conviction-picks","tag-jefferies-top-stock-picks","tag-jubilant-foodworks","tag-lodha","tag-mankind-pharma","tag-markets","tag-msci-india-underperformance","tag-ntpc","tag-shriram-finance","tag-stock-picks","tag-top-stock-picks"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/70220","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=70220"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/70220\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/70221"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=70220"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=70220"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=70220"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}