The IT question
Indian IT has been caught in a punishing cross-current. Revenue deflation fears, a shifting global tech spending environment, and relentless negative news flow have hammered valuations across the sector. Yet Bhandarkar argues this is precisely where discipline matters most.
“These are companies with solid cash flows. The challenges are real — particularly revenue deflation — but they have levers. It becomes an execution game that will differentiate one company from another. The cash is real,” says Bhandarkar.
JM Financial’s position is a slight underweight on IT rather than an outright exit. Bhandarkar notes that many large-cap IT names are now trading at discounts to their five-year and ten-year valuation benchmarks — a technical signal that has historically rewarded patient investors. “We are not sellers clearly at these prices,” he said firmly, describing the fund’s approach as playing IT in a “very disciplined manner.”
The key variable, he warned, is time. It will take months for macro headwinds to fully reflect in quarterly numbers, and that window gives management teams room to adapt, restructure, and execute. The funds that rush in or rush out, he implied, will likely be on the wrong side of the trade.
Rotation fatigue and its cure
Over the last 15 months, Indian equities have cycled aggressively: energy surged, metals ran hard, PSU banking grabbed the baton, and then the cycle repeated. The Nifty Energy Index and Nifty Metal Index have been standout performers, while IT lagged. But Bhandarkar is skeptical of chasing the rotation.
“It is a mug’s game to figure out where the market rotates next,” he said candidly. Instead, JM Financial is operating near sector-neutral across major indices, with only modest underweights in energy and IT. The more productive edge, Bhandarkar believes, lies in bottom-up stock picking — and the data backs him up.The most recent earnings season delivered healthy surprises. The NSE 500 delivered approximately 19% year-on-year PAT growth. Smallcaps led the charge at 26% growth, while largecaps posted 18% and midcaps 16% — all achieved against an already-challenging base from the prior year.
The smallcap opportunity
Perhaps the most actionable signal from Bhandarkar’s commentary was his growing conviction on smallcaps. After a market that favored the safety and visibility of largecaps during peak volatility, he believes the pendulum has swung far enough. Smallcap stocks have corrected meaningfully, valuations have reset, and earnings are inflecting upward.
“Incrementally, I would think we would be more bullish on smallcaps in terms of stock picking. The stocks have clearly corrected,” says Bhandarkar.
This is not a call to abandon quality — Bhandarkar was clear that 18% largecap profit growth is “not a bad number” and opportunities exist across the market cap spectrum. The shift is more about where incremental risk-reward is most attractive given current prices. For patient investors willing to do the work on individual companies, the broader market correction of the past 15 months has created a genuine window.
The message from one of India’s experienced fund managers is ultimately one of quiet confidence over reactive strategy: trust earnings, resist sector noise, and let disciplined stock selection do the heavy lifting in 2026.