Defense orders are likely to accelerate
Over the past four years, the Defense Acquisition Council has approved procurement proposals worth nearly ₹12 lakh crore. Historically, order conversion took two to three years, but Pandey expects a much faster turnaround time this time.
“Our feeling is that many of these approvals could translate into orders within the next six months,” he said.
Major beneficiaries include Bharat Electronics, Bharat Dynamics, Solar Industries and Hindustan Aeronautics. Pandey noted that these companies offer the assurance of mid-to-high-level earnings growth over the next four to five years, supported by continued defense investments of almost 2.5% of GDP.
Titan’s lab-grown diamond moves strategically
On Titan Company’s foray into lab-grown diamonds, Pandey called it a “much-needed step” as affordability becomes crucial amid high gold prices.
“Titan remains one of the few large-cap consumer sectors where we can expect mid-to-high-teens growth over the next three to four years,” he said, adding that the company’s business prospects for watches have also improved. He also highlighted Phoenix Mills as a strong indicator of consumption growth, supported by rising footfall and diversified retail exposure.
NBFCs and BFSI remain major bets
Within financial services, Pandey remains bullish on Shriram Finance, citing a recent rating upgrade that could reduce funding costs and improve margins.
For Bajaj Finance, he expects annual growth of 18 to 20% and earnings growth of 22 to 24%. He calls the stock attractive despite concerns about near-term asset quality.
Be careful with precious metals and prefer ferrous play
Pandey advised caution on gold and silver-related trades after a sharp rally, noting that ICICIdirect has reduced exposure to silver ETFs.
“Non-ferrous metals like copper and aluminum are at their highest in recent years. It is not the time to chase them,” he said, favoring ferrous names like Tata Steel, helped by rising domestic prices and possible safeguard duties.
Pharmaceutical sector: Domestic companies are preferred
In the pharmaceutical sector, Pandey sees stronger visibility of growth in domestic formulations. He named Sun Pharma, Ajanta Pharma and Ipca Laboratories as preferred choices, citing regulatory stability and expansion of domestic opportunities under Schedule M norms.
IT and real estate as counter-bets
Pandey said IT stocks could emerge as counter-trade after poor performance, especially big players like Tata Consultancy Services and ER&D-focused companies like KPIT Technologies.
He also sees scope for sector rotation into real estate and investment-related themes as markets enter the new year, supported by the upcoming Union Budget and improving investment sentiment.
Market Outlook
In summary, Pandey said investors should focus on sectors where gains are visible, rather than chasing recent outperformers.
“Defence, BFSI, selective consumption, counterbalancing IT and capex-linked sectors offer a balanced risk-reward as we enter the next phase of the market cycle,” he said.
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