Jefferies Favors Large-Caps, Adds Kotak Bank and Welspun

Jefferies India has changed some of the stocks it recommends in its model portfolio.

It increased its investment weighting in Reliance Industries and added Kotak Mahindra Bank and Welspun Corp.

The firm thinks large companies offer a better balance of risk and possible returns than mid-sized companies right now.

It says large-cap stocks look cheaper compared with mid-caps, while the difference in expected earnings growth is getting smaller.

Jefferies also reduced its weighting in non-bank finance companies and real estate, which can be sensitive to interest rates.

The report noted that government bond yields have risen in several countries.

Jefferies strategist Christopher Wood said high US bond yields pose a growing risk to US stocks.

Jefferies also said investors could see a boom in Indian equities once US bond yields begin to fall.