“Long-term allocators such as pensions and sovereign funds have not pulled back significantly from India. Once this tactical reallocation is over, we should see flows returning,” Shetty told ET Now.
Largecaps getting attractive
According to Shetty, Indian equities have corrected since their September 2024 peak, while earnings have inched higher. This has made valuations in largecap stocks far more reasonable compared to a year ago. “The broader market still looks relatively expensive, but largecaps are becoming more attractive for investors,” he added.
Sectors in focus
Quantum Advisors continues to hold large allocations in financial services and IT services, with fresh opportunities emerging in pharmaceuticals and logistics. Shetty noted that private sector banks are trading at some of their lowest valuations in two decades, making the sector compelling.
On the other hand, he remains cautious on consumer staples and industrials, citing expensive valuations. “Even after three years of underperformance, consumer staple companies are trading at 60–70x earnings, which is difficult to justify,” he said.
Consumption recovery ahead
Shetty expects a revival in consumption, especially with a good monsoon, GST cuts, and potential interest rate cuts providing a boost to rural and urban demand. “This could act as a near-term catalyst for markets, which have been rangebound for months,” he observed.
IT services outlook
While concerns persist around US policies, discretionary spending, and AI-led disruption, Shetty remains optimistic. “Indian IT services firms have historically adapted well to technology shifts. Though near-term sentiment is weak, valuations are attractive, and long-term prospects remain solid,” he said.
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