NSE’s index Nifty-50 outperformed the emerging markets index in terms of performance. It is way ahead of them in Nifty-50 in the span of three, six and one year. But investors should also be cautious of this spectacular rise of Nifty. International brokerage firm Jefferies has said in a report that if we look at the previous record, the performance of Nifty has been weak after reaching the top level. Hence Nifty-50 may underperform going forward. Jefferies has also made adjustments to its model portfolio. This portfolio is now looking defensive and it has added ITC. It has reduced the weight of two other stocks.
This performance will not last long: Jefferies
The Nifty-50 has more than doubled since hitting its all-time low in March. In fact, Nifty-50 has benefited from record foreign investment and double the number of retail investors in 2020. In March 2021, Nifty-50 had fallen to 7,511. Actually, due to COVID, the effect of selling in the global market was also affecting the domestic market. But earlier this month, the Nifty rallied 136 per cent to 17,792 from the March 2020 low. During this rally, Nifty outperformed the performance of the emerging market.
Jefferies says that according to its long-term daily rolling analysis, this performance of Nifty-50 will not be sustained for long. The analysts of Jefferies believe that the records show that after such performance, the Nifty has shown a decline. The brokerage house has a positive opinion on India’s economic activities but the valuation of the shares of domestic companies is very high and there is no scope for any upside. Risk-reward is not visible in favor of investors.
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Added ITC to Portfolio
Jefferies has added ITC to its model portfolio. The stock has gained 17.5 per cent in the last one month. The brokerage firm has increased the target price of this stock to Rs 300. However, it has cut the weight of Tata Steel and State Bank of India.
(Article: Kshitij Bhargava)
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