Chris Wood of Jefferies continues to maintain that India's benchmark Sensex will reach the 1 lakh mark over the next five years. Greed and Fear has reiterated this view that it first expressed in February last year. "This target, on a five-year view, now assumes trend of 15 percent EPS growth and that a five-year average one-year forward PE multiple of 19.8 times is maintained," the note said.

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Wood further said that like all long-term bull market, the Indian stock market will continue to climb the "proverbial wall of worry."

The note highlights two risks over the next few months. "One obvious worry will be the inevitable questioning of the current consensus, namely that Prime Minister Narendra Modi will be re-elected," the note said. India will be holding general elections next year.

Another potential risk that the note highlights is the reduction in retail investor activity, following a period when the stock market has traded in a tight range. Active brokerage accounts have declined from the June 2022 peak of 3.8 crore to 3.1 crore in April 2023. India's Nifty 50 index has risen 7 percent over the period of June 2022 to April 2023.

However, despite the drop, Greed & Fear believes that India's domestic asset management story remains the most exciting globally, given the obvious issues in China. The note further highlights that the resilience of the stock market during the recent monetary tightening cycle has been due to consistent domestic equity flows in the form of Systematic Investment Plans (SIP).

Wood also cites the return of foreign investors to Indian equities as they have retreated from China yet again. "Dedicated emerging market investors now appear to be slightly Overweight India, relative to history," he said.

"One issue here is that India's neutral weighting in the MSCI benchmarks has always been inappropriately low given the size of the economy," Wood said. Therefore, Greed & Fear has had an average 40 percent exposure to India in the Asia ex-Japan long-only portfolio in recent years, the note said.

In other changes to his portfolio, Chris Wood has introduced an investment in Zomato with a 4 percent weightage in his India long-only portfolio as global long-only portfolio with a similar 4 percent weightage.

Also Read: Chris Wood introduces Zomato in his India and global long-only equity portfolio