Speaking to ET Now, Srivastava said overseas investors have sold nearly ₹2.74 lakh crore worth of Indian equities, a signal domestic investors should not ignore. “When global investors vote with capital at this scale, it means they see better risk-adjusted opportunities elsewhere. You need to heed that signal,” he said.
Valuations, risk-return mismatch a concern
Srivastava said Indian equities are delivering returns comparable to fixed deposits despite significantly higher risk. “If you take equity risk and get 10% returns, which is close to FD rates, it does not make sense,” he said, adding that several Indian stocks continue to trade at 70–80 times earnings—levels rarely seen globally.
He said his firm has reduced equity allocation over the past year, shifting capital toward precious metals and global assets. “India is barely 3–4% of global markets. Diversification is essential, especially when smart money is reallocating elsewhere,” he said.
Stick to monopolies, policy winners
Rather than rotating into new themes, Srivastava said investors should stay with sectors that enjoy strong moats and policy support. Autos, metals, select banks, telecom and stock exchanges remain preferred bets. “In India, fortunes change dramatically with policy decisions—GST cuts helped autos, tariffs lifted metals. This will continue,” he said.
He dismissed IT as a near-term opportunity, calling it structurally weak after tax incentives were withdrawn. “Until there is meaningful policy support or earnings revival, IT remains a laggard,” he said.
Telecom, e-commerce: tactical exposure
On telecom, Srivastava said the sector remains attractive due to its limited competitive landscape, though policy sensitivity remains high. On e-commerce, he advised measured exposure. “You cannot ignore it, but valuations are nonsensical. Allocate 10–15% of capital, buy on deep corrections and live with volatility,” he said.
Q3 earnings outlook: autos, pharma to lead
Looking ahead to the December quarter earnings, Srivastava expects autos, telecom, stock exchanges, metals and auto ancillaries to outperform. He also sees strength in pharma and CDMO companies, aided by rupee depreciation against the euro and pound.
In contrast, he warned that consumer discretionary segments such as garments and retail could disappoint. “Household spending has shifted toward autos and travel. Discretionary retail will remain under pressure,” he said.
2026 allocation strategy
For 2026, Srivastava said his preferred asset allocation remains unchanged: one-third Indian equities, one-third global equities and one-third precious metals and commodities. Within Indian equities, he favours pedigree companies with long operating histories, strong governance and execution capability.
“2026 is about pedigree, not themes. Pick companies that have delivered consistently for five to seven years. Scarcity matters more than valuation in sectors like defence, where execution—not orders—is the real challenge,” he said.
He added that concentrated portfolios outperform in volatile markets. “Your top 10–20% holdings decide returns. Spreading capital across 50 stocks achieves nothing,” Srivastava said.