A $3 billion fund house is betting on lenders and brokers even before the earnings

As the financial year 2024 nears the end, India’s stock markets are oversold but the next trigger for traders and investors will be in the upcoming earnings season that starts in April, according to Krishna Sanghavi, Chief Investment Officer (Equities) at Mahindra Manulife Investment Management, which manages assets worth over ₹25, 615 crore ($2.98 billion) at the end of February.

Sanghavi believes it makes sense to be overweight in financials, including shadow banks and capital market plays. The Nifty 50 and Sensex have rallied over 5% in the last one month, after a sustained sell-off since September last year. If the rebound continues, it could bode well for broking firms, like Angel One and Motilal Oswal, as well as asset management companies like HDFC AMC and Aditya Birla Sun Life AMC.

Sanghavi is also bullish on cement companies. “If you are betting on India’s capex cycle demand wise, cement is a pure play commodity which is required, can’t be imported,” he explained.

Some of the marquee cement stocks have gained a lot more than the benchmark indices in the last one month.

The Nifty IT index is currently trading 5% below its five-year rolling average. Indian IT stocks have corrected by around 15-20% over the past three months, with price-to-earnings (PE) multiples contracting by 12-21%, driven by expectations of sharp earnings deceleration. Is it a good time to buy IT stocks? “Prefer to say let’s wait till 2nd April,” Sanghavi said.

Read more: Four IT stocks that UBS advises investors to bet on ahead of Q4 results

The prospects for Indian IT services like TCS, Infosys, and Wipromay present a contrasting picture. The threat of reciprocal tariffs by US President Donald Trump on April 2 adds to the uncertainty.