How Jefferies is reshuffling its portfolio as soaring bond yields give Nifty bulls sleepless nights

What happened: Jefferies added Kotak Mahindra Bank to its model portfolio, raised weight on Reliance Industries to overweight, and trimmed exposure to NBFCs, real estate and consumer discretionary stocks ahead of Q2 earnings. Key numbers: US 10-year Treasury yield above 5%, Japan 10-year above 3%. RBI repo rate 5.25%. Why it matters: Jefferies argues largecaps offer better risk-reward as bond yields rise, with a wider valuation discount and narrowing earnings growth gap versus midcaps. It warns even a shallow rate cycle could compress valuations further.

Jefferies added Kotak Mahindra Bank to its model portfolio, raised weight on Reliance Industries to overweight, and trimmed exposure to NBFCs, real estate and consumer discretionary stocks ahead of Q2 earnings.

Jefferies argues largecaps offer better risk-reward as bond yields rise, with a wider valuation discount and narrowing earnings growth gap versus midcaps. It warns even a shallow rate cycle could compress valuations further.