CLSA turns bullish on India after 18 months, bets big on HDFC Bank, M&M, L&T—Key things to know

After staying cautious on India for nearly 18 months, global brokerage CLSA has finally changed its tone. The earlier defensive stance has now flipped into a more constructive, almost bullish view on Indian equities. The message is pretty clear that the worst phase for markets may already be behind us, and the focus is slowly shifting back to opportunity.

“Maximum pain” phase likely over

CLSA feels Indian markets may have already gone through their toughest stretch, what it calls the “maximum pain point.” After a long period of weak sentiment, volatility, and global uncertainty, the brokerage believes a lot of the bad news is already behind us.

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Even global worries like geopolitical tension around the Iran conflict are, in their view, largely already priced in. That means the market is no longer reacting fresh to every negative headline the way it used to.

On top of that, valuations have cooled off. Indian equities are now trading below their 10-year average, which, historically, is often where long-term investors start getting more interested again. In simple terms — downside looks limited, but upside is slowly opening up.

Big shift in thinking: from safety to growth

What really stands out in CLSA’s note is the change in mindset. The strategy is no longer about being defensive and sitting tight. It’s now about trying to capture upside where it shows up.

This is basically a shift from “don’t lose money” mode to “find winners” mode. And that changes how portfolios are being built.

Portfolio changes tell the story

The new positioning shows a clear rotation across sectors. In consumption, ITC has been replaced with Varun Beverages, which signals a move towards faster growth names in the FMCG space.

In autos, CLSA has moved out of Bajaj Auto and shifted towards Mahindra & Mahindra, a clear bet on broader demand recovery and stronger rural cycles.

In metals and construction materials, UltraTech Cement has taken a back seat while Vedanta comes in as a post-cycle recovery play.

Infrastructure exposure has also seen a change from NTPC Limited to Larsen & Toubro, pointing to a stronger preference for execution-heavy infra beneficiaries.

Financials are clearly where CLSA is leaning harder. The brokerage prefers names like Bajaj Finance and IndusInd Bank, while also increasing weight on larger banks like HDFC Bank. At the same time, it has turned underweight on IT, trimming exposure to names such as Tech Mahindra.

The broader takeaway is simple; banks and domestic cyclicals are back in favour, while IT takes a step back because of global demand uncertainty.

Core holdings still intact

Even after all these changes, CLSA hasn’t walked away from its long-term conviction ideas. Some names still remain steady in the portfolio:

ICICI Bank, State Bank of India, Oil and Natural Gas Corporation, Tata Motors, Infosys, DMart, and Godrej Properties continue to stay part of the core India basket.

Bottom line

The overall tone from CLSA is no longer cautious but it’s not blind optimism either. It’s more like a reset.

The idea is that the heavy correction phase is done, downside is limited, and now the real returns will come from picking the right sectors and stocks. Financials, infra, and cyclicals are back in focus, while defensives and IT are taking a step back.

After 18 months of staying careful, CLSA is finally back in the India story just with a sharper, more selective approach this time.