However, that does not close the door to opportunities. “It doesn’t mean that every small cap or mid cap wouldn’t perform,” he noted, adding that this is exactly where portfolio managers earn their stripes. According to Bhasin, institutional investors who remained invested in megacap names in the IT, telecom and oil and gas sectors over the past year have delivered relatively more stable performances.Looking ahead, he expects the next nine to 12 months to remain a stock-picking market, with large caps offering better downside protection than broader segments. Also within IT, preference is given to selected names where profit revisions will probably be more limited. “So again, not the entire pack, but three or four selective companies that are overweight within the sector,” he said, naming Infosys and Tech Mahindra as preferred picks.
MSME Push: Credit and Hiring as Key Proxies
The government’s renewed push for SME expansion could create a multiplier effect across sectors, but Bhasin believes investors should be clear about the most immediate beneficiaries. “One of the biggest proxies is that as the MSMEs can now hire more people, the government may give them more support, credit seems to be the first proxy,” he said.
Regional banks and NBFCs that lend to MSMEs could be the early winners as these companies expand their capacity and explore both domestic and export markets. Rental-related plays can also generate profits. “Info Edge, the Naukri company is directly benefiting from that,” said Bhasin, pointing to the rising trends in non-IT recruitment.
Longer-term value consumption could benefit, but short-term enthusiasm may be tempered by rich valuations. “In the short term, I would say next year, two and a half years, it will help MSME lenders and companies like Naukri,” he added.
Premium vs. Value: Balance is key
On whether portfolios should tactically move from premiumization to value consumption, Bhasin made a balanced comment. According to him, portfolio construction is highly dependent on the size of the assets under management and liquidity constraints. While several value plays are relatively small and illiquid, bigger names like Trent or Titan offer scale.
He agreed that a mix makes sense. “A balance of one or two good premium products and a balance of one or two good value products,” he said, expressing a preference for FMCG staples over discretionary consumption in the year ahead.
Earnings risk remains for discretionary
Asked whether the earnings downgrades are largely behind the sector, Bhasin was cautious. “I don’t think it’s discretionary spending,” he said, pointing to recent cuts in estimates, especially in urban consumption. In contrast, he sees relatively lower earnings risk in FMCG names compared to discretionary peers.
Defense theme: Valuations are still a concern
Bhasin’s skepticism on the defense issue remains intact. “I would be disappointing myself by saying no, actually it remains the same,” he said when asked if his opinion had changed since July. While he acknowledged the long-term promise of themes such as defence, EMS and renewables under the pressure of ‘manufactured in India’, he cautioned that valuations and execution risks cannot be ignored.
Dependence on government orders, delays in land acquisition and slower than expected order execution remain major concerns. Recent moves by the government to introduce more competition in sectors dominated by a few players indicate a rethink, even at the policy level. “They also think that we should reduce our dependence on one or two or three companies in a particular sector,” Bhasin said.
#Large #caps #safer #haven #stock #market #Nitin #Bhasin