Brokerage firm Jefferies has removed food delivery aggregator Zomato from its model portfolio and has also exited its holdings in the same. Another stock to drop out of the model portfolio is telecommunications giant Bharti Airtel Ltd.

Instead, the cash raised from Zomato’s exit has been used to increase the weight of the metal stock. Tata Steel and Hindalco have replaced the two excluded names in the Jefferies model portfolio.

Between January and October this year, Jefferies’ portfolio of models has outperformed the Nifty 50 index by 209 basis points led by an underweight stance on TI and Metals and an overweight stance on State Bank of India. This was partially offset by the overweight attitude on the property. This year, its best performance fell to 92 basis points and 10.8 percentage points since launching in October 2020.

Jefferies Current Model Portfolio

Weight gain/gain Removal/Weight Loss
Tata steel Cash
Hindalco Bharti Airtel
L&T Zomato
The Dependency Industry Maruti
State Bank of India
IndusInd Bank

Bharti Airtel has also been removed from the Jefferies model portfolio. Brokerage firms cite concerns about increased 5G capital spending, which may not be compensated in the near future with the help of increased tariffs. However, it continues to maintain a buy rating on the stock with a target price of Rs 855. Higher or earlier than expected rate hikes, stronger 5G adoption are some of the bullion triggers for the stock while pending rate hikes and slow 5G adoption are downside risks. .

In turn, Jefferies has increased his weight on metal stocks such as Tata Steel and Hindalco, including his portfolio of models. As a result, the weight of the materials sector in Jefferies’ portfolio rose to neutral from previously zero. Brokers believe that a peak in US interest rates and China’s reopening could add to the positive sentiment around the metal.

Sector Establishment
Finance Obesity
HE Underweight
Energy Underweight
telecommunication Underweight
Main Consumer Obesity
Consumer Choice Neutral
Ingredient Neutral
Health Underweight
Industry Obesity
necessity Obesity
Housing area Obesity

Jefferies also increased his weight on Larsen & Toubro which was trading near record highs, citing an increase in the broader capex cycle, including housing.

First published: IST



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