Bernstein Cuts Private Bank Exposure, Removes Nifty IT From India Portfolio

Bernstein has revised its India model portfolio by dropping exposure to the Nifty IT index and reducing its allocation to private sector banks, citing the absence of a broad market trigger and continued macroeconomic uncertainties. In its July 1 note, the brokerage retained its year-end Nifty target of 26,000 but said the investment environment remains challenging amid geopolitical developments, inflation risks and uncertainty surrounding the monsoon.

As part of the changes, Bernstein removed ICICI Bank, IndusInd Bank and the Nifty IT index from its recommended portfolio. It simultaneously added Axis Bank and Zydus Lifesciences.

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Private Banks See Selective Allocation

The brokerage said it had already reduced its financial sector exposure earlier this year and continues to follow a selective approach within the segment.

According to Bernstein, large private banks no longer offer the same combination of growth visibility and governance premium that supported the sector in previous years. It also pointed to increasing competition from public sector lenders and the absence of immediate rerating triggers.

The note stated that ICICI Bank and IndusInd Bank were removed after their year-to-date outperformance. At the same time, Bernstein retained HDFC Bank, stating that governance-related concerns have eased and management stability has improved.

Axis Bank was included in the portfolio on expectations that credit costs may moderate after a phase of elevated provisioning. Bernstein also said the lender’s growth outlook remains comparatively stronger within the private banking space.

Nifty IT Allocation Dropped

The brokerage also removed the Nifty IT index from its India portfolio, indicating that the sector continues to face near-term headwinds despite a correction in valuations. Bernstein said the current environment favours a selective approach rather than broad exposure to technology stocks.

The Nifty IT share price index has remained under pressure in recent sessions as investors assessed demand trends and spending patterns across global technology markets. Bernstein noted that stock-specific opportunities may still emerge, but it no longer prefers a benchmark allocation to the sector.

Healthcare Added as Selective Opportunity

Bernstein introduced Zydus Lifesciences to its India portfolio, citing its product pipeline and expanding wellness business. The brokerage noted that the wellness segment contributes nearly 12% of the company’s revenue.

The report added that opportunities in the broader market remain concentrated in areas such as data centre infrastructure and emerging manufacturing themes, most of which are represented by smaller companies rather than benchmark index constituents.

Bernstein said its India model portfolio has delivered a 1.1% return since its January update, compared with a 6.7% decline in the Nifty over the same period. While retaining its Nifty target of 26,000, the brokerage said market conditions continue to warrant a selective investment approach rather than broad sector exposure.