Aniruddha Sarkar, co-founder and chief information officer of Equinova Investment Managers, has held firm on his negative view of Indian IT services, calling it "a big avoid".
He said he is becoming more positive on banks after the RBI's rate hike.
Speaking to NDTV Profit, Sarkar said the stance is not about valuations. "I remain negative on the sector," he said, pointing to headwinds on growth and policy changes.
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He said management interactions have not yet given clarity on how companies will steer through the uncertainty.
He dismissed the day's bounce as "a dead cat bounce". Any company with heavy exposure to the US market, he added, "will remain under pressure", citing the unsettled India-US trade deal.
His remarks follow Thursday's US action. The US Department of Labour suspended Microsoft, Adobe, Cognizant, Infosys, Tata, Wipro, HCL and Capgemini from the PERM programme, citing active federal investigations.
PERM is generally a prerequisite for sponsoring a foreign employee for a green card.
TCS has said its PERM applications were in single digits over two years and it expects no impact on workforce strategy. TCS reported its Q2 FY27 results on October 8.
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Sarkar said Indian IT could benefit in the long run as AI applications are built for customers. But that is, he said, "a very small proportion" of these companies today.
On banks, his tone was more upbeat. The RBI raised the repo rate by 25 basis points to 5.50% on Wednesday and shifted to a "calibrated tightening" stance. It was the first hike since February 2023.
Sarkar said Equinova had long been underweight on banks because of uncertainty over management changes at two large private banks and the rate cycle.
That picture is now clearer, he said, with new appointments at HDFC Bank and Kotak. Valuations "have become very attractive", he said. He described banks as being in "a very sweet spot", citing strong lending growth and deleveraged corporate balance sheets.
More broadly, Sarkar said he remains invested and is "a buyer in the market".
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Fresh money has not come in, he said, and equity allocations are well below their long-term average. Manufacturing and industrials remain his top allocation, with valuations in his view "not expensive" on a PEG basis.
He is turning more positive on healthcare, where he said hospital stocks were hit by uncertainty that now appears to be behind them. He is also looking at auto ancillaries that are, in his view, "not yet on the radar".
He prefers small and mid caps, and called defence "a multi-year up cycle", though he has booked some profits in private defence names.
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