Banking on India capex cycle, Jefferies’ Wood adds L&T to 2 long-only portfolios

“The investment in

in the India long-only portfolio will be removed and replaced by an investment in infrastructure play Larsen & Toubro given the rising hopes of a capex cycle in India,” Wood said in his weekly Greed & Fear newsletter.

He added L&T to the Asia ex-Japan long-only portfolio. Its weightage of 3 per cent in portfolio is being paid for by reducing the investments in Samsung Electronics Pref, MediaTek and TSMC by one percentage point each.

The Asia ex-Japan long-only portfolio is now 36 per cent invested in India, with another 28 per cent allocated to China, Taiwan and Korean technology. There is also a 19 per cent allocation to energy, resources and gold.

“The portfolio is primarily geared to the domestic demand story in India.” Wood said.

Thanks to the massive rally in the Indian market, Wood’s recently-introduced long-only portfolio for India is up 21 per cent in US dollar terms since inception on July 1, compared with a 13 per cent gain in the MSCI India Index and a 13.2 per cent rise in the Nifty Index.

Supply issues inflating energy prices

Wood categorically said the volatile moves in crude oil and natural gas prices in the international markets have been more because of supply issues than demand pressures, as believed by some analysts.

Natural gas prices have surged rapidly in recent days, along with crude oil prices, which have topped the $80 a barrel mark, even before winter’s onset in Europe and the US. Analysts forecast further rise in prices in coming months.