The market needs clarity, but currently, we are in an ambiguous state. We do not know what is happening on the tariff front. We also do not know how the earnings season will pan out, as the start has not been as strong as one would have hoped. What is your assessment regarding the market direction?
Sudip Bandyopadhyay: Well, there is considerable volatility ahead. You’re absolutely right—the corporate results season has begun, with TCS already out, and others will follow quickly over the next couple of weeks. However, we are not expecting anything spectacular. We anticipate a subdued set of numbers from Indian corporates at this stage. Yes, there will be exceptions, but the overall tone is likely to remain muted.
Beyond that, the tariff-related volatility emanating from the US is creating turmoil in the markets. It’s not just about specific tariff issues—even companies like TCS have spoken about widespread uncertainty. They are struggling to secure new contracts, with many deals being delayed or slowed down as US corporations adopt a cautious stance. This uncertainty is impacting several sectors beyond those directly affected by tariffs.
This is a global issue, and India is no exception. Additionally, Indian markets are dealing with corporate results that do not justify current valuations. There’s a clear disconnect between the valuations at which many stocks are trading and their underlying fundamentals.
While discussing market direction, I’d like to know which sectors you believe are worth betting on in the current scenario. Also, has the market already made a near-term top?
Sudip Bandyopadhyay: I don’t think we’ve made a near-term top—or a near-term bottom, for that matter. Volatility remains the norm. Until we get some certainty or at least stability on the tariff front, markets will continue to swing. We’ll see stock-specific and sector-specific movements based on news flow.In terms of sectors, we like cement. Although the monsoon season may bring daily developments that are not favorable to the cement story, fundamentally and structurally, the sector looks good. UltraTech, the leader in the space, remains attractive even at current levels.
Another sector we’re positive on—despite seasonal monsoon-related challenges—is construction and infrastructure. Larsen & Toubro, the leader in this space, looks good at current valuations. Its order book is robust, including margin-accretive global orders, which are improving the company’s overall margin profile. Under these circumstances, L&T is attractive at current levels.
BFSI is another space where most investors are overweight. While we like the sector, we prefer a cautious approach. SBI, from the PSU banking space, offers valuation comfort compared to private-sector peers and looks good from a medium- to long-term perspective.
Along with banking and financials, I’m observing increased activity in the real estate sector. There’s talk that the upcycle remains intact for the long term. Based on recent sales trends and brokerage reports, do you think a dip would be a good buying opportunity in real estate?
Sudip Bandyopadhyay: Selectively, yes. One has to be a bit cautious because demand at the top end of the residential market is plateauing. It’s not declining, but incremental demand is becoming harder to generate. So we need to tread carefully.
However, commercial real estate—particularly in southern states—is booming due to the continuing GCC boom. Therefore, players with a healthy mix of residential and commercial projects in major metros are worth considering. DLF, with its extensive land bank and long-term potential, is attractive at current levels. Phoenix Mills is another name worth looking at. While there may be short-term volatility and occupancy-related challenges, fundamentally, it looks promising from a three- to five-year horizon.
What’s your view on the IT sector? TCS’s results weren’t particularly encouraging, and the stock was under pressure on Friday. With continued ambiguity in news flow, should investors consider building fresh positions in IT stocks now that valuations are relatively attractive?
Sudip Bandyopadhyay: As you rightly said, uncertainty persists. The lack of fresh order inflows and the slowing or stalling of existing projects are pressuring both large-cap and mid-cap IT firms. This strain will remain visible, and companies will find it difficult to provide clear guidance—not just for the full year, but even for the next quarter.
Given this backdrop, caution is advisable. However, if you’re a long-term investor looking to gradually build a position in IT, this may be a good opportunity. Whether the right moment is today, next week, or the week after is difficult to predict. But if you believe in the long-term story of Indian IT, it makes sense to start accumulating slowly. These are fundamentally strong companies and will perform well over time—but right now, we’re in a period of heightened volatility.
