According to Macquarie Capital's Managing Director and Head of Equity India Sandeep Bhatia, Hyundai Motor India and Ashok Leyland are his top picks in the auto sector, citing new model launches and consumption growth ahead of the government's pay commission payout. He also highlighted ICICI Bank and State Bank of India (SBI) as attractive private banking options after this quarter's sell-off, while noting that Shriram Transport Finance Company (STFC) has bottomed out for investors seeking value opportunities. Bhatia expects auto stocks to gain from a wage hike due by June next year when the government's pay commission report comes into effect, with festive-season numbers in September and October — affected by the Pitru Paksha and Shraadh period — looking soft initially but changing once the pay commission payout boosts discretionary spending on vehicles.
As reported by CNBC TV18, Bhatia noted that April-June 2026 quarter's results were stronger than expected for both large-cap and small-cap companies, correcting what he called a broader overvaluation in the market. He pointed out that small-cap stocks tend to move quickly because their shareholding is limited, which explains the sharp rally in that segment. He also observed a shift among large foreign institutional investors (FIIs), who have traditionally stuck to large-cap names, with a wider range of stocks now being traded by traditional long-only FIIs' large holders. Bhatia noted that private banks' underperformance this quarter reflects over-ownership rather than weak fundamentals, as FIIs have long held large positions in these stocks, which also make up a big share of total market capitalisation.
According to the report, Bhatia favours autos despite a possible near-term dip, explaining that festive-season numbers in September and October — affected by the Pitru Paksha and Shraadh period — could look soft, but the picture changes once the pay commission payout comes through, boosting discretionary spending on vehicles. He also named Divi's Laboratories among his preferred picks, citing its position in the peptides business, though he noted the company's management is difficult to access for investors. Bhatia expects the technology sector to benefit from India being viewed globally as a play against the AI trade, meaning Indian IT stocks could benefit if AI-related valuations in Western markets decline.
As reported by CNBC TV18, Bhatia flagged a possible rotation between technology stocks and power-sector names over the next 18 months, depending on how artificial intelligence (AI) valuations move in the West. He noted that the technology sector has been hit over the past two years by the shift in investor attention toward AI-linked companies, mostly in the United States, but India is viewed globally as a play against the AI trade, meaning Indian IT stocks could benefit if AI-related valuations in Western markets decline. Bhatia said holding both technology and power-sector stocks as a hedge makes sense for existing investors, but added that each position needs closer monitoring than in the past two years. He also noted that Macquarie continues to hold a positive view on power transmission and data-centre related stocks, which have delivered strong returns on the back of capital expenditure plans.
According to the report, Bhatia rated Indian corporate governance at the top of the Asian region and credited this improvement to two factors: the expansion of the Indian economy, which has pushed mid-cap and small-cap companies into higher market-cap brackets, and an improvement in corporate governance among smaller firms. He also noted that consumer staples results have been mixed this quarter, with ITC coming under pressure while Nestle performed well, stating the sector needs to be watched over the next 12 months for signs of a broader recovery. Asked about the Reserve Bank of India's (RBI) draft circular on flexi loans, following a sell-off in Bajaj Finance shares, Bhatia declined to comment directly on the draft but said the lending system remains healthy, adding that he does not see an issue among large listed lenders.
