In his note on Friday, June 20, Wood said that his investments in stocks like Larsen & Toubro, Thermax, and Godrej Properties will be removed from the portfolio and will be replaced by stocks like Manappuram Finance, TVS Motor and Home First Finance.
All the three stocks will have a weightage of four percentage points each in the India model portfolio, Wood wrote.
Additionally, GREED & fear will also be increasing their existing investments in PB Fintech and Bharti Airtel by one percentage point each.
Wood, a long-term property bull, has highlighted that India’s property market upcycle is currently in its fifth year and has further room to run, adding that a lower mortgage rate after the RBI rate cuts should help boost sales in the affordable and mid-income segments.
“GREED & fear still has a 19% weightage in property developers in the India long-only portfolio, with the Realty Index having risen 35% from the April 7 low but still 14% below the June 2024 high,” the note said.
Market valuations have become an issue again, particularly within midcaps, according to Wood, with the Nifty Midcap 100 trading at 27.1 times its 12-month forward earnings, having gained nearly 25% from its April lows. “That is why corporates are also placing equity to take advantage of such valuations,” Wood referred to a spate of block deals, IPOs and QIPs having taken place recently.
There has been $7.2 billion worth of equity raised last month and another $6 billion already so far in June. Wood believes that it is this supply which poses the main risk to the market. “Equity supply was running at around $7 billion a month prior to the correction which began in September last year,” according to GREED & fear.
