“There has been a clear shift from private sector banks to PSUs. Many of them are available at or below one-time book value, and the results have been much better than expected,” Maheshwari said.
Strong earnings and asset quality fuel PSU bank rally
Maheshwari expects the upcoming earnings season to further boost sentiment for PSU banks, as most have shown resilience on both net interest margins (NIMs) and asset quality.
“The asset quality cycle for PSU banks has been surprisingly strong. That’s giving institutional investors confidence to return to this space,” he explained.
With several mutual funds still underweight PSU banks, Maheshwari believes the sector could see incremental buying as rate cuts and liquidity tailwinds support financial stocks in the next few quarters.
Rate cuts and consumption themes to lead next market upswing
According to Maheshwari, the interest rate-sensitive sectors — including banking, autos, consumption, and real estate — will likely be the key outperformers in the near term.“RBI has already cut rates by 100 basis points, and another rate cut in December looks likely. That’s very positive for rate-sensitive sectors,” he said.He added that government measures like GST rationalization and personal tax cuts are set to boost consumer spending, providing additional support to the consumption-led recovery.
Defence stocks overpriced; Investors should wait for better entry
While defence stocks have seen strong order books and high valuations, Maheshwari warned that the market’s exuberance is overdone.
“Companies like BEL have always had large order books, but growth has never exceeded 10–15% annually. The market is giving them 100x multiples, which isn’t sustainable,” he noted.
Maheshwari advised investors to avoid chasing overvalued defence and capital goods stocks in the near term, suggesting a wait-for-correction approach instead.
On consumer and alcobev stocks: Domestic players hold strong
Addressing concerns about the alcoholic beverages segment, Maheshwari said India’s hard liquor companies remain well-positioned due to strong local brands and deep market knowledge.
“India is not a big beer market — it’s a hard liquor market. Domestic companies understand local preferences well and have built strong brands. I’m not worried about this space,” he said.
Urban Company: Long-term play, but watch execution
Maheshwari, who disclosed that he personally holds Urban Company stock, said he remains positive on the firm’s long-term potential given the lack of organized competition in the services space.
“Urban Company has a long runway for growth, but execution and profitability will be key. At current prices, it’s worth holding for the long term,” he added.
What’s next? Banking and consumption to dominate in 2025
Summing up his outlook, Maheshwari said the next one to two quarters could be led by banking, consumption, and real estate, while sectors like defence and capital goods may take a breather.
“The near-term story is clear — lower interest rates, stronger consumption, and selective value in PSU banks. These are the themes that should drive the next leg of the rally,” he concluded.