Investment opportunities identified in large-cap stocks and sectors

V Srivatsa, a Fund Manager at UTI Asset Management Company, believes that Indian markets are currently stabilizing after a significant decline over the past six months. He notes that most negative factors contributing to this fall are now factored into market prices. However, he cautions that a quick recovery is unlikely. Instead, he expects a consolidation phase that may continue for one or two more quarters, until there's clearer visibility on future earnings. Srivatsa sees potential investment opportunities in several sectors, other than banks. He highlights large-cap stocks, PSU power companies, oil and gas, telecom, and metals as areas of interest. However, he remains cautious about consumer durables, fast-moving consumer goods (FMCG), and capital goods due to high valuations and challenges in growth. The recent market decline began last October and intensified in January and February 2025. This drop was mainly due to high initial valuations and significant selling by foreign institutional investors. Despite the recent improvements in market sentiment, many retail investors are still feeling anxious. In the PSU power sector, Srivatsa notes that the current valuations are attractive for investments. He is more skeptical about private power companies due to high renewable energy valuations. The oil and gas sector also presents value opportunities, as prices have stabilized and government policies remain favorable. Telecom is another sector Srivatsa is optimistic about, citing strong earnings certainty despite high valuations. He also points out that the metal sector, particularly non-ferrous metals like aluminum, is likely to perform well due to global supply constraints. Ferrous metals also have potential benefits, thanks to a safeguard duty that could bolster earnings in the short term. Regarding the consumer durables and FMCG sectors, Srivatsa indicates that he is cautious due to high valuations and persistent growth challenges. While he anticipates a potential recovery in growth, he prefers to wait for more favorable entry points before investing in these sectors.