IT sector not broken, but evolving, says TRUST MF's CIO Mihir Vohra; shares top sectoral bets

Mint

3 days ago

Mihir Vora, CIO, TRUST Mutual Fund, believes that the Indian stock market could step out of its consolidation zone once global volatility subsides and investor focus returns to earnings. Meanwhile, Vohra remains unperturbed by the ongoing FII selloff, as DII support and SIP inflows bolster confidence in equity demand. He is bullish on select sectors like infrastructure, logistics, and defence suppliers, NBFCs, among others. Edited excerpts:
The Nifty has been churning in a tight band for several weeks. The domestic and global macroeconomic and geopolitical setup has many moving parts, and markets are probably waiting for a reduction in uncertainty. Globally, US trade negotiations are still on, and the US Dollar continues to be weak in spite of high bond yields.
Domestically, the long-term macro parameters are healthy – low inflation, improving current account deficit and fiscal deficit. Consumption indicators are a mixed bag, and credit growth has not yet picked up in spite of ample liquidity and rate cuts. In the short term, the earnings season has seen a mix of negative and positive surprises. Sustained earnings growth remains key for the market. If global volatility subsides and investor focus returns to domestic earnings, that could be enough to lift sentiment. Clarity on a U.S.–India trade agreement by the August 1 deadline can also be a catalyst.
Foreign portfolio investors have turned cautious again — derivative positioning suggests the most bearish sentiment in months. That may continue until we get clear signals on U.S. Fed policy or trade developments. In the medium to long-term, if the US Dollar continues to remain relatively weak, we should see sustained flows to countries like India. We see FPI selling as cyclical rather than structural. In time, India's superior long-term macro, demographics and higher growth should bring global interest back.
India also has a strong internal support system: domestic institutions remain net buyers, and record retail SIP flows continue to underpin demand.
Overall, we have an underweight stance in the IT sector. We are tackling the sector exposure selectively, preferring midcap IT names and digital infra providers with stronger growth visibility, rather than overcrowded large caps. Even within the blue-chips, firms executing well on AI/automation and client-based cost takeout remain interesting. The sector isn't broken — it's just evolving. While the leading IT giants delivered subdued numbers — flat revenues, soft global deal wins — valuations are now trading closer to historical norms than early 2024 extremes.
Our growth conviction remains highest in capex, power transmission, infrastructure logistics, and defence suppliers—segments with visible order books, operating leverage, and a longer runway of growth. However, we are selective as these segments have become quite popular and valuations are not uniformly attractive.
Financials offer opportunities in NBFCs and banks, with expectations of improving credit growth and asset quality. Auto ancillaries and engineering services/export plays are also showing promise as the global capex cycle recovers. In healthcare, the stories are more stock-specific, and we like the CDMO space and hospitals.
After sharp rallies in many names, investors have started booking profits. The pullback is a natural consolidation, not a capitulation. The long-term fundamentals — rising defence budgets, dual-use platform opportunities, and improving export arcs — remain intact.
Stock selection is critical now. We favour robust balance sheets, clear execution histories, and firms with pipeline visibility.
Yes, we launched our third equity fund, the Multicap Fund. This continues our efforts to offer funds in all the core categories to our investors and distributors, the first two being the Flexi Cap and Small Cap funds. The Multicap category is a core category and is suitable for most investors who want a diversified exposure to the stock market.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.