“Yes, when you look at two of the biggest exporter segments which is IT and pharma, so together they contribute nearly about 14% of the weightage and they are again caught in the tariff storm,” Pandey said, highlighting the external headwinds dragging down sentiment.
He added that while exporters will remain under pressure, domestic-oriented sectors present better opportunities. “With no returns in the last one year, this is a good time to look into domestic oriented sectors, the likes of auto, capital goods, cement and so these are the pockets where risk-reward is quite attractive,” he said.
Pandey noted that the Nifty has rallied nearly 18% from April lows, followed by a correction of about 3–5%. “We are already at 3% correction level. So, possibly, 2% additional correction is what we would expect… probably this is one of the best times to invest and usually our sense is that the markets bottoms are made when we have maximum pessimism which is what we are experiencing at this point in time.”
FMCG Outlook: HUL, Tata Consumer in FocusOn Hindustan Unilever (HUL), Pandey pointed out that inventory correction had been expected but extended weakness could weigh in the near term. “What was not there in the price that this correction or inventory correction could continue even for the month of October, so which means that you will have a near-term sentimental impact on the stock,” he said.
Looking ahead, he sees volume recovery from Q3 onwards. “Within FMCG, say for example, Tata Consumer ready to eat or ready to consume kind of as a category might benefit because from unbranded to branded the price differential has been brought down… our preferences largely towards the food consumer companies, the likes of say for example, Marico… same is the case with Tata Consumer.”While Q2 may remain weak, he believes select names in the food segment will outperform. On the broader earnings impact, Pandey maintained a cautious stance: “So, at this point in time, we are still not pencilling in a negative impact because Q3 onwards there is a sense that you will see a margin recovery and volume growth is something which can pick up… in general FMCG companies relatively compared to Nifty are going to underperform in terms of earnings.”Auto Sales: A Bright SpotAuto remains one of the stronger performers. “If you look at last few days, the sales volume have been pretty good and there could be an element of surprise going forward also given the queries or the kind of footfalls what we have seen. So, our sense is that auto can still do a lot more better,” Pandey said.
IT Under Pressure, TCS Not Attractive YetEven with TCS slipping below ₹3,000, Pandey advised caution. “So, probably not yet because in it while sentimentally things have been a lot more negative, fundamentally we are expecting about 40 to 65 bps kind of impact on the margin perspective, but the global environment continues to remain edgy,” he explained.
Despite recent deal wins, he flagged that many are not translating into revenues. “Challenges are still remaining but there are some positives also… euro is up about 11 odd percent, pound is again up 6.5%, so we will start to see some currency benefit there.”
He prefers select sub-segments instead. “What we like is again selective names, so for example, ER&D companies or even some of the BPO companies, so those are not so impacted from this H-1B. So, one can be very selective in it but in general, it is still going to witness challenges and not from the number perspective but from the sentiment perspective.”
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