Financials, capital goods and manufacturing are the three sectors that Ajay Khandelwal, Head of Equities at Motilal Oswal Asset Management Company, would keep at the core of a model portfolio for the second half of FY27.
In an exclusive email interview with NDTV Profit, Khandelwal said these sectors offer a combination of growth and earnings visibility, while selectively adding new-age technology and healthcare could provide further opportunities.
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Khandelwal expects financials to benefit from healthy credit growth and supportive liquidity. The sector is also among the areas he favours over the next six to 12 months as he looks for businesses where earnings upgrades could still be ahead.
For capital goods and manufacturing, Khandelwal sees a longer-term runway from government and private-sector capital expenditure, infrastructure spending and the broader China+1 opportunity.
His preference for these sectors is part of a broader strategy of focusing on businesses where earnings growth and longevity can justify valuations.
“At around 20–21x, valuations are certainly not cheap, but we believe they need to be seen in the context of earnings,” Khandelwal said.
He believes sustained double-digit earnings growth could help absorb current valuations over time, allowing investors to remain constructive while being selective.
Beyond the three core sectors, Khandelwal would selectively add new-age technology and healthcare.
New-age technology offers structural growth from digitisation and artificial intelligence, although Khandelwal has cautioned that AI is creating a structural shift within the IT industry. Companies that adapt to AI-led spending and move up the value chain should emerge stronger, he said.
Healthcare, meanwhile, offers a combination of defensive characteristics and long-term growth.
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Khandelwal's broader sector preference also includes domestic consumption and power over the next six to 12 months, along with select industrials.
His investment approach is centred on identifying companies with quality, growth and longevity rather than chasing market momentum.
“Our approach is not to chase momentum, but to identify QGLP companies where the earnings runway can justify the valuation,” Khandelwal said.
For the second half of FY27, therefore, his core remains tilted towards financials, capital goods and manufacturing, with selective exposure to new-age technology and healthcare.
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