Global research and broking house Bernstein has adjusted its investment portfolio for India following the completion of the June quarter reporting season (Q1-FY27). The firm maintained positions in several stocks from its original focus list, including Larsen & Toubro (L&T), NTPC, Axis Bank, HDFC Bank, Nuvama, and HomeFirst.
Eternal was added to the portfolio, which analysts believe continues to demonstrate competitive advantages in a sector where capital raising is becoming increasingly difficult, as well as Paytm, due to potential catalysts related to MDR. Additionally, Adani Ports took a place in Bernstein's model portfolio for India.
However, Avenue Supermarts was excluded from the portfolio after recent outperformance in the stock market and increased risks to urban growth associated with the expansion of quick-order services. Bernstein noted that the portfolio has a significant allocation to financial companies, reflecting their broad coverage and bottom-up analysis conviction.
Bernstein analysts, led by Managing Director Venugopal Harre, stated that Dmart is being removed from the portfolio because there is currently no clear development direction. Although CPI inflation remains controlled, weak sowing is observed, and the Wholesale Price Index (WPI) has consistently exceeded 8 percent for four months. Furthermore, the threat from quick-order services always remains a relevant factor.
Despite the overall picture, Bernstein considers the market interesting at a deeper level, as stock-specific opportunities continue to represent the best path to achieving above-average returns in what are likely to be moderately performing conditions. Bernstein set a target for the Nifty at 26,000, which is nearly 8 percent higher than current levels.
The first quarter of fiscal year 27 (Q1-FY27) reporting for NSE200 showed a slowdown in growth momentum: it decreased to 8 percent compared to 12.5 percent in the March quarter. Nevertheless, the picture proved to be much more heterogeneous. Analysts note that Nifty 50 companies demonstrated a sharp acceleration in profit growth from almost stagnant figures in the previous quarter to 12.8 percent, while stocks ranked 101st to 200th in NSE200 showed more modest growth of 8 percent.
The biggest disappointment, according to Bernstein, was the Nifty Next 50, where profits fell by almost 4 percent. This decline was attributed to losses in Oil Marketing Companies (OMCs) and the weakening of several banking and cement companies. Harre emphasized that the growth of NSE 200 excluding OMCs could have been 19 percent in the June quarter on a low base, and without metallurgy, 15 percent. Given the expected growth of NSE 200 at 13 percent and the complication of base effects starting in September 2026, there are few opportunities to raise profit forecasts, creating certain difficulties.