Nimesh Chandan backs private banks, cyclicals as valuations turn attractive

Amid ongoing geopolitical tensions and energy-led uncertainty, market volatility has raised an important question for investors — is it time to start buying? According to Nimesh Chandan, from Bajaj Finserv AMC, the recent correction should be seen as a temporary disruption rather than a fundamental shift in India’s growth story.

“Indian economy, business cycle, and credit cycle were doing very well… this is a speed bump, not a structural issue.” He adds that improving geopolitical signals are encouraging. “Ceasefire talks suggest we are moving away from the storm… long-term investors can pick good companies at attractive valuations.”

Even as indices have remained largely range-bound over the past couple of years, corporate fundamentals have strengthened meaningfully. Chandan points out that many companies are now fundamentally stronger yet cheaper than before. “Many companies have improved earnings, balance sheets, and cash flows, and are now available cheaper than two years ago.” This has created a broad opportunity set for investors. His preference remains tilted toward growth-linked sectors. “We like financials, materials, and industrials… within these, private banks, metals, cement, defence, and power.”

On sectoral positioning, the strategy reflects a pro-cyclical bias, alongside selective defensiveness. “We are positive on consumer discretionary… selective in autos, with a tilt towards two-wheelers.” He also remains constructive on relatively stable sectors. “We are also positive on pharma and healthcare, but underweight on IT.” The caution on IT stems from both structural and cyclical concerns, particularly around the impact of artificial intelligence. “Technology shifts like AI are creating uncertainty… this is putting pressure on valuations.” In an environment of muted growth expectations, he believes capital may flow elsewhere. “With low growth visibility, investors may prefer sectors with better growth and valuations.”

Within financials, private banks stand out as a strong opportunity where both value and growth converge. “Credit growth is picking up, asset quality is benign, and valuations are extremely attractive.” Despite improving fundamentals, stock prices remain subdued. “Stocks are near five-year lows, while fundamentals are improving.”

On the consumption front, Chandan highlights a broad-based recovery underway, supported by policy measures and rising household wealth. “From grocery to jewellery to property, data shows a clear uptick in demand.” Structural drivers such as tax cuts, lower interest rates, and the wealth effect are beginning to reflect in spending patterns. “Policy support and wealth effects are driving discretionary consumption.” However, he emphasizes selectivity within the theme. “We prefer strong brands with pricing power and consistent growth visibility.”

Importantly, Chandan’s investment approach avoids timing the market through cash calls. Instead, it focuses on staying invested and generating returns through selection. “We do not take cash calls… we remain about 99% invested at all times.” He underscores that consistent outperformance is driven by disciplined choices. “Outperformance comes from sector and stock selection.”Despite the recent volatility and changing valuations, the broader investment framework remains unchanged. “We are not changing long-term views… only adjusting within stocks based on valuations.” The strategy involves upgrading portfolios as opportunities emerge. “Switching from good companies to great ones when valuations align.”

Looking ahead, India’s manufacturing story continues to hold long-term promise, with potential tailwinds from currency movements. “Manufacturing renaissance in India continues across sectors like EMS and pharma.” He also sees currency trends as a possible advantage for exporters. “Currency depreciation could improve export competitiveness going forward.”

In essence, while near-term volatility may persist, the underlying message remains clear that strong fundamentals, improving consumption, and attractive valuations are creating opportunities. For long-term investors, this phase may be less about reacting to uncertainty and more about patiently building positions that can compound over time.