He adds that the low earnings base of the past few quarters increases the probability of stronger growth prints ahead. Quantum AMC’s proprietary upside-potential metrics, which evaluate two-year expected returns, have also improved in recent months. “We are optimistic on markets, especially largecaps,” Thomas noted.
Betting selectively on mid & smallcaps
Thomas cautions that investors must be highly selective in the mid- and smallcap space, where valuations have stretched after a multiyear rally. Quantum’s smallcap fund follows a GARP (growth at reasonable price) strategy, and has selectively added new positions, including a hospitality company, he said.
The AMC has also added a logistics stock—initially due to the commissioning of the Dedicated Freight Corridor (DFC), which is set to boost volumes sharply. The stock has additionally benefited from speculation around a possible India-US trade deal and tariff easing.
IT back in favour after slowdown
Post-COVID, IT stocks surged but later corrected as revenue growth slowed due to deferred global technology spending. Now, Quantum AMC has turned overweight on largecap IT again.
“Discretionary tech spending cannot be postponed forever. We believe stability is returning, and deferred projects may resume sooner,” Thomas said. Large IT services companies, he believes, offer meaningful upside as deal pipelines remain steady and growth begins to normalize.
Financials, banks & insurance hold strong potential
Financials form one of Quantum AMC’s highest-conviction overweight positions. Banks are expected to benefit from improving credit growth and margin normalization as interest rates stabilize.
“As rate cuts get passed on, NIMs will reset, and with economic recovery, credit growth should pick up,” Thomas explained.
Insurance companies—which faced temporary concerns after GST rate cuts—are also expected to recover. “Ticket sizes are already showing signs of improving,” he added, making the sector attractive again.
Outlook: Largecaps to lead market’s next leg
With a low earnings base, domestic policy support, improving affordability, and stabilization across key sectors, Thomas expects India’s largecaps to drive the next leg of market performance. Emerging clarity around trade negotiations with the US could further boost export-oriented plays.
“Valuations remain high in pockets, but opportunities are emerging. We’re optimistic on the broader earnings outlook,” he said.