Rohit Singhania bets on financials, telecom and healthcare for alpha generation

India’s equity markets may have staged a respectable rebound from their March lows, but the mood on Dalal Street is turning increasingly cautious as geopolitical tensions, elevated crude prices, and macroeconomic uncertainties begin to cloud the earnings outlook.

Speaking to ET Now, Rohit Singhania from DSP Mutual Fund said investors are entering a “wait and watch” phase, with risks rising steadily over the past month as the ongoing global conflict refuses to ease.

“What we have seen in the last one month or so is the risks have gone up. Till one month back, 45 days back, the view was the war is not going to last for long. But the fact is it is still going on,” Singhania said.

He added that while the full impact of higher commodity prices and supply chain disruptions has not yet filtered into the economy, the pressure is beginning to build beneath the surface.

“The pressure of commodity prices going up and the impact it may have on inflation, we have still not felt the actual impact because if you see the transport fuel prices, other prices have still not gone up a lot,” he said.

According to Singhania, prolonged geopolitical uncertainty could eventually force companies to raise prices, which may hurt demand and corporate profitability over the coming quarters.

“So, I would say yes, risks still remain in terms of supply chain disruptions, they continue. Eventually, if this continues for longer, we will see price hikes also happening. So, what it does to demand? So, it is a wait and watch period right now,” he noted.Earnings Risks Still Not Fully Priced In
Despite the correction seen in several pockets of the market, Singhania believes valuations are not yet attractive enough to justify an aggressive investment stance.

“I would say not so much currently because if you go longer-term averages if you take, 16.5-17 is a fair multiple if you look at two years forward. So, I would say risk-reward is still not favourable,” he said.

DSP has already revised down earnings assumptions and valuation expectations for several holdings, but the fund house is not rushing to deploy capital aggressively.

“We need to be aware about the potential risk which we have not seen in the last one-and-a-half months since the war started,” he added.

On market valuations, Singhania said the Nifty currently appears balanced between upside and downside risks.

“If people just looking at yesterday’s Nifty at around 23,500, it was giving me an upside of 7-8% and a downside of 7-8%. So, we are somewhere in the middle right now,” he explained.

However, he indicated that a deeper correction could create a more compelling buying opportunity.

“So, I would not be all in or all out, but yes, another 5-7% correction if at all the market corrects, that is the time I would go aggressively and buy more in my portfolios,” he said.

Largecaps Preferred Amid Uncertainty
Singhania reiterated that DSP continues to maintain a slight preference for largecaps in the current environment, though he stressed that portfolio construction remains fundamentally bottom-up rather than driven by market capitalisation labels.

“As a fund manager we do not start by saying I want to buy a largecap stock or a midcap or smallcap,” he said.

He explained that investment decisions are based on business quality, valuations, and risk visibility over the next couple of years.

At the same time, he acknowledged that smallcaps appear relatively more expensive than largecaps at present.

“In this current environment of uncertainty where there are lot of unknowns versus known, historically it tells us largecaps tend to do better in these periods,” Singhania said.

Still, he clarified that compelling opportunities in the smallcap universe would not be ignored simply because of broader valuation concerns.

Financials, Telecom and Healthcare Stand Out
Among sectors, Singhania said DSP remains constructive on financials, telecom, and select healthcare names over the next 12 to 18 months.

“We are quite positive on the financial space whether it is banks, insurance companies, few capital market plays. We also like telecom and few healthcare names,” he said.

The optimism on banks stems largely from stronger balance sheets across both lenders and corporates, a stark contrast to the stress seen in previous economic slowdowns.

“Today even if a pure commodity company comes and tells us that for the next two quarters my profits are not going to grow or maybe they can fall, we do not worry a lot because they have strong balance sheets,” he said.

On telecom, Singhania highlighted the sector’s defensive characteristics and resilient demand profile.

“They are not really impacted by what is happening globally. Like, I need to use my telecom every day. We all are using our phones. We use data,” he said.

Healthcare, meanwhile, is being driven more by earnings visibility than by valuation comfort.

“So, healthcare is a call more on the visibility of business growth rather than on valuations,” he explained, referring specifically to hospitals and diagnostic businesses.

IT Remains a “Wait and Watch” Bet
Singhania struck a cautious tone on the information technology sector, admitting that the evolving business environment has made forecasting difficult.

“So, IT again, it is a wait and watch for me at least, it is my personal view,” he said.

He acknowledged that IT stocks appear inexpensive on pure valuation metrics, but warned that business visibility remains weak amid concerns over slowing demand and margin pressures.

“Every day is a new day today. So again, we as DSP we are trying to understand what can be the actual impact. Is it a one, two, three more quarter impact or it can continue for next one-two years?” he said.

DSP’s funds currently remain slightly underweight on IT, with Singhania saying there is no strong fundamental trigger yet to turn positive on the sector.

“When you compare it with business outlook or business visibility, you feel there is maybe still time to wait it out,” he added.