A $46 billion asset manager reallocates some funds from auto and industrials to these sectors
Harsha Upadhyaya, who manages over $45 billion in funds as the Chief Investment Officer at Equity at Kotak Mutual Fund, has recently reallocated some funds from the auto and industrial sectors to the information technology (IT) and banking sectors.
As a defensive investment, he noted, banks have not performed well in recent quarters, but given the first quarter’s (April-June) earnings, there should not be any major downsides.
While they have slightly increased their exposure to IT recently, reducing their underweight position in some stocks, they still have lower-than-average investment in the sector. Even though Upadhyaya does not expect impressive quarterly numbers, he believes it is wise to shift some funds from domestic-focused sectors to more defensive investments like IT.
Both banks and IT are considered good defensive choices, he told CNBC-TV18.
Upadhyaya expects corporate earnings growth to be in the mid-teens this year and the next year (FY26).
While there are no major issues, stock prices are still high. Therefore, it’s important to choose stocks and sectors carefully to avoid making the portfolio too risky and to minimise exposure to potential market volatility, he advises.
In the telecom space, he said tariff hikes have happened in line with expectations. While most of the short-term positives are already in the price and in the valuations, “The next big trigger would be if there is any more thinking on the adjusted gross revenue (AGR) and if there is any progress on those lines.”
While they have trimmed positions in the auto and auto ancillary spaces, they still have a higher-than-average investment in the sector.
He believes the short-term positives in the auto sector have already been factored in, and upcoming monthly sales figures might be weaker compared to recent ones. Consequently, earnings may not be as strong as in the past few quarters.
“However, we continue to have an overweight, the bias within the auto sector could be towards two-wheelers as earlier, where we believe there is still some money to be made,” Upadhyaya added.
For the entire interview, watch the accompanying video
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