Welspun Corp, KMB shares added; RIL weight raised as Jefferies bets on largecap stocks
RIL shares were trading 2.42 per cent higher at Rs 1,215.10. KMB shares jumped over 4 per cent and were later trading at Rs 431.35, still up 3.7 per cent. Welspun Corp Ltd also climbed 4.15 per cent to Rs 2,601.10.
- Oct 6, 2026,
- Updated Oct 6, 2026 11:14 AM IST
Global investment bank Jefferies in its latest note added Kotak Mahindra Bank Ltd to its India Model portfolio, citing leadership overhang removal and a potential growth acceleration from 15 per cent levels. It also added Welspun Corp to the portfolio, which is seen benefitting from a multi-year upcycle in oil & gas infra spending in US and Middle East, supported by local manufacturing.
Jefferies raised its weight on Reliance Industries Ltd (RIL), citing attractive valuations and upgrade possibilities on higher gross refining margins (GRMs). It trimmed weights in rate sensitives sectors such as NBFCs, real estate and consumer discretionary (Eicher Motors Ltd)
"We believe risk-reward is becoming more favorable for largecaps on better relative valuations vs. Midcaps, while the earnings growth gap is narrowing over FY26-28E," it said.
RIL shares were trading 2.42 per cent higher at Rs 1,215.10. KMB shares jumped over 4 per cent and were later trading at Rs 431.35, still up 3.7 per cent. Welspun Corp Ltd also climbed 4.15 per cent to Rs 2,601.10.
Jefferies noted that MSCI India is down 10 per cent from its August peak, underperforming MSCI EM by 14 percentage points, largely on rate worries, bringing PEs below long-term average.
"While Indian yield gap with US is at 20-year lows, inflation gap is lower too. Unlike 2022, this should be a shallower rate hike cycle given real rates are still positive in India. Large caps, which are below average valuations, may offer hiding places," Jefferies said.
The global investment bank said the market is facing rising yields with the US 10-year Treasury yield above 5 per cent, Japan's 10-year yield above 3per cent, and UK & German govt bond yields also moving higher.
"Apart from inflation, markets also pricing worsening fiscal balances, declining participation from foreign central bank buyers and large debt-funded capex for AI buildout. Our global equity strategist Christopher Wood believes that US 10Y yields above 5 per cent create a growing risk for US equities," Jefferies said.
Jefferies sees shallow rate hike cycle in India while expecting first ratke hike in Octoer RBI meeting.
"We expect the current rate-hike cycle to be mild (50-75bps). RBI's CPI projections for Mar27 qtr. (5.5%) imply real rates are largely neutral (current repo rate at 5.25%). Already, the 10-Y bond yields in India are +45bps in last few weeks and overnight markets indicate two 25-bps hike into Dec26. Valuations compression as rates rise. Experience with the prior rate hike cycles show a correlation between the quantum of tightening vs. the valuations compressions," it said.
Jefferies said MSCI India PE compressed 22 per cent from peak in January 2022 and up to June 2022 as the RBI commenced an accelerated rate tightening. Earlier, in a relatively narrower 2018 rate hike cycle, MSCI India PE compression was 7 per cent.
"From Aug26, Indian markets decline has brought the MSCI India at 18.4 times 1-year forward PE, 7 per cent below its 10-year average. Its valuation premium vs EM peers still elevated at 90 per cent. At a stock level, cos. aggregating 39 per cent of MSCI India weight trade at valuations 10 per cent below their averages," Jefferies said.
Jefferies said risk-reward is becoming more favorable for largecaps on better relative valuations against midcaps, while the earnings growth gap is narrowing over FY26-28E.
Global investment bank Jefferies in its latest note added Kotak Mahindra Bank Ltd to its India Model portfolio, citing leadership overhang removal and a potential growth acceleration from 15 per cent levels. It also added Welspun Corp to the portfolio, which is seen benefitting from a multi-year upcycle in oil & gas infra spending in US and Middle East, supported by local manufacturing.
Jefferies raised its weight on Reliance Industries Ltd (RIL), citing attractive valuations and upgrade possibilities on higher gross refining margins (GRMs). It trimmed weights in rate sensitives sectors such as NBFCs, real estate and consumer discretionary (Eicher Motors Ltd)
"We believe risk-reward is becoming more favorable for largecaps on better relative valuations vs. Midcaps, while the earnings growth gap is narrowing over FY26-28E," it said.
RIL shares were trading 2.42 per cent higher at Rs 1,215.10. KMB shares jumped over 4 per cent and were later trading at Rs 431.35, still up 3.7 per cent. Welspun Corp Ltd also climbed 4.15 per cent to Rs 2,601.10.
Jefferies noted that MSCI India is down 10 per cent from its August peak, underperforming MSCI EM by 14 percentage points, largely on rate worries, bringing PEs below long-term average.
"While Indian yield gap with US is at 20-year lows, inflation gap is lower too. Unlike 2022, this should be a shallower rate hike cycle given real rates are still positive in India. Large caps, which are below average valuations, may offer hiding places," Jefferies said.
The global investment bank said the market is facing rising yields with the US 10-year Treasury yield above 5 per cent, Japan's 10-year yield above 3per cent, and UK & German govt bond yields also moving higher.
"Apart from inflation, markets also pricing worsening fiscal balances, declining participation from foreign central bank buyers and large debt-funded capex for AI buildout. Our global equity strategist Christopher Wood believes that US 10Y yields above 5 per cent create a growing risk for US equities," Jefferies said.
Jefferies sees shallow rate hike cycle in India while expecting first ratke hike in Octoer RBI meeting.
"We expect the current rate-hike cycle to be mild (50-75bps). RBI's CPI projections for Mar27 qtr. (5.5%) imply real rates are largely neutral (current repo rate at 5.25%). Already, the 10-Y bond yields in India are +45bps in last few weeks and overnight markets indicate two 25-bps hike into Dec26. Valuations compression as rates rise. Experience with the prior rate hike cycles show a correlation between the quantum of tightening vs. the valuations compressions," it said.
Jefferies said MSCI India PE compressed 22 per cent from peak in January 2022 and up to June 2022 as the RBI commenced an accelerated rate tightening. Earlier, in a relatively narrower 2018 rate hike cycle, MSCI India PE compression was 7 per cent.
"From Aug26, Indian markets decline has brought the MSCI India at 18.4 times 1-year forward PE, 7 per cent below its 10-year average. Its valuation premium vs EM peers still elevated at 90 per cent. At a stock level, cos. aggregating 39 per cent of MSCI India weight trade at valuations 10 per cent below their averages," Jefferies said.
Jefferies said risk-reward is becoming more favorable for largecaps on better relative valuations against midcaps, while the earnings growth gap is narrowing over FY26-28E.