Founder and CIO Rahul Chadha, pointed out that some segments, like paints, value retail, and quick commerce, face rising competition and margin pressures, making them less attractive. “Some of these names, particularly the mature categories, are going to see their multiples contract. So, we would not really jump in to buy those names,” he said.
With Budget 2025 focusing on a consumption boost, investors are debating whether to shift from capex-driven stocks to consumption plays.
Chadha, however, sees industrial stocks offering better opportunities in the months ahead, particularly around March or April, when lower valuations could provide attractive entry points.
While central government capex is expected to plateau, he expects State and PSU investments to rise, along with private sector capex as capacity utilisation improves. Indian industrial firms are also making inroads into global supply chains, strengthening their long-term prospects.
“We will use this pullback to buy industrial stocks, hopefully at a 15-20% discount,” he said.
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Chadha pointed to IT services as an area of interest, citing names like Cognizant Technologies.
He also sees improvements for the banking sector, which has faced significant FII selling pressure.
While Chadha remains wary of expensive small- and mid-cap stocks that have surged in the past two years, he believes that leading banks such as ICICI Bank and HDFC Bank are well-positioned. “We have already seen part of the correction, but some names could still fall another 15-20%,” he cautioned.
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The potential impact of US President Donald Trump-era tariffs may come with delays and negotiated solutions. “Our sense is that China will make some concessions, such as fulfilling prior trade agreements or selling parts of its TikTok business in the US,” he said.
He believes the US administration will avoid taking actions that could derail economic growth.
For the full interview, watch the accompanying video
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