According to The Economic Times, V Srivatsa, Executive Vice President and Fund Manager at UTI AMC, has positioned India's market outlook as quite positive, driven by cooling geopolitical tensions and falling crude oil prices. The Nifty 50 is currently trading at an attractive 16-17.5x on a two-year forward basis, with earnings growth projected at 14-16% for FY28. However, he cautions that the next two quarters will still reflect the lagged impact of elevated crude oil prices, potentially leading to earnings downgrades of 2-3% that the street has not fully priced in. With prices now easing, he expects the second half of the financial year to deliver significantly better economic indicators.
As reported by The Economic Times, Srivatsa's analysis reveals that largecaps offer more value than midcaps right now, particularly as a stable macroeconomic environment in the second half would disproportionately benefit banks — the largest contributor to Nifty EPS growth. This preference is supported by the expectation that private sector banks have borne the brunt of heavy FII selling over the past year, leaving them undervalued relative to long-term averages with NIMs having bottomed out, credit growth remaining healthy, and credit costs still comfortable. The risk-reward strongly favours private banks, making them attractive investment opportunities for the current market environment.
According to The Economic Times, Srivatsa sees signs that the AI trade may be approaching its peak, with expectations that flows will gradually rotate back toward India as earnings momentum slows in those markets. However, he notes that predicting capital flows is harder than forecasting earnings, stopping short of calling a precise timeline for the return of foreign investment to India. His analysis suggests that as earnings momentum slows in AI markets, investors may gradually shift their focus back to India, though the timing remains uncertain.
As reported by The Economic Times, Srivatsa maintains a contrarian view on largecap IT stocks, seeing them as undervalued for patient investors at 12-14x earnings with a 5-6% dividend yield. He argues that when enterprise AI adoption picks up meaningfully, Indian IT, with its execution depth, is well-placed to capture a significant share of that opportunity. This represents a strategic positioning against the current market trend where foreign investors are focused on AI plays, offering an attractive entry point for investors with a longer-term horizon.
