- Jefferies reshapes India portfolio, adding Manappuram Finance and Hindustan Zinc for gold rally exposure
- Manappuram Finance benefits from rising gold loans amid increasing gold prices
- Hindustan Zinc added for silver exposure, which moves with gold in current rally
There's a new gold rush in Indian markets, only this time the prospectors are equity strategists, and the pickaxes are model portfolios. Jefferies has reshaped its India portfolio around the gold rally, adding Manappuram Finance and Hindustan Zinc as its two clearest plays on rising bullion prices.
Manappuram Finance is the brokerage's preferred pick on the accelerating monetisation of household gold through formal lending channels, a theme it expects to strengthen as gold prices climb and more borrowers turn to gold-backed loans. The stock has been funded by modest trims across other lenders in the portfolio, including Bajaj Finance.
Hindustan Zinc has been added not for gold but for silver. India's largest silver producer gives the portfolio exposure to a metal that tends to move alongside gold in this kind of rally, a theme Jefferies expects to benefit from the same macro backdrop driving bullion prices higher.
The gold march is on, says Jefferies
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That backdrop is playing out on the global stage too. In a separate note, Jefferies' global strategist Christopher Wood flagged that gold has climbed 6.6% since August 20, as US Treasury Secretary Scott Bessent's efforts to suppress bond yields through expanded buybacks put pressure on the dollar instead.
Wood pointed to Bessent's attempt to replicate Mario Draghi's 2012 "whatever it takes" moment as the trigger, with the US Dollar Index falling and gold mining stocks, tracked by the NYSE Arca Gold BUGS Index, up 49% since bottoming in mid-July. Wood's portfolios remain positioned for further gains in gold and gold miners on the view that yield-suppression efforts, if they succeed, take pressure off bonds and push it onto the currency instead.
All That Glitters...
Jefferies also flagged a wider basket of gold beneficiaries it is watching in the India note, including jewellers Titan and Kalyan Jewellers, commodity exchange operator MCX, and gold-focused lenders IIFL Finance and Muthoot Finance.
The gold tilt sits within a broader sector stance: the revamped India portfolio is now overweight financials, telecom, metals, power and real estate, and underweight energy, consumer staples and consumer discretionary. Financials remain the largest allocation at 33.5% against a 30.6% weight in the MSCI India index, led by HDFC Bank, SBI and Axis Bank.
Domestically, gold prices have risen 2.5 times over the past three years, a rally Jefferies expects to extend on the back of fiscal pressures in the US and Japan keeping interest rates structurally lower. Globally, Wood's note adds that gold has also comfortably outperformed equities once returns are measured in bullion rather than local currency terms. The Topix, for instance, is up 213% in yen terms since Japan launched yield curve control in 2016, but down 43% once converted into gold.
As every gold rush teaches, the real fortunes often go to those selling the pickaxes rather than swinging them. Jefferies' picks span both: a lender that finances the digging, and a silver producer that rides the same wave.
ALSO READ: Jefferies Adds Manappuram, HZL, Navin Fluorine Meesho To Its Model Portfolio
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