- Fundamentally, financials are headed into a good season
- Demand looks robust for Indian IT names
- Optimistic on the digital space but valuations are a concern
The banking space has been one of the worst-performing sectors as they have borne the maximum brunt of selling by foreign investors after the IT space. Nevertheless, Mr Singhania believes that banks will do well hereon. Within the banking space, he prefers to stay in large names with renowned franchises due to the uncertainties that still persist.
Some of the smaller banks also look attractive as some of them have valuations even lower than their book value. Fundamentally, looking at the improvement in asset quality and credit growth, they believe that overall financials are headed into a good season.
While most believe that the US market is headed into a recession which is a headwind for IT companies, Mr Singhania believes that there may be a slowdown in the US economy but expects the government to take appropriate steps to prevent it from slipping into a recession.
As for Indian IT companies, the demand looks robust but there are concerns in terms of margins due to high salaries and rising travel expenses. In his opinion, Indian IT names have global competitiveness. Additionally, he also believes that given the recent correction, valuations have cooled off and look reasonable.
He is also very optimistic about the digital space but is concerned about the valuations that this space demands. Thus, despite his positive view of the space, he would advise investors to be stock specific.
Overall, Mr Singhania is optimistic about Financials and the Indian IT space from a 3-4 year investment perspective.