BTTV Exclusive | Harsha Upadhyaya on IT, private banks, improving market sentiment
Upadhyaya said stock investors were primarily concerned about the West Asia conflict due to the volatility in energy prices and its potential impact on the rupee.
- Aug 4, 2026,
- Updated Aug 4, 2026 3:24 PM IST
Harsha Upadhyaya, Chief Investment Officer (CIO) and President, Equity, at Kotak Mahindra Asset Management Company on Tuesday said market sentiment has improved amid easing geopolitical tensions in West Asia. He added that the ongoing earnings season has offered some hope, as fears of a demand slowdown and margin pressure have largely not materialised. "Contrary to most expectations, where there was concern over weakening demand and margin pressure, that is not visible in most of the results we have seen during this earnings season," Upadhyay told BTTV in an exclusive interview.
While another two weeks are left for the June quarter earnings season to conclude, the Kotak AMC CIO said the delivery of numbers have been better than what the market was expecting, which is positive.
Upadhyaya said stock investors were primarily concerned about the West Asia conflict due to the volatility in energy prices and its potential impact on the rupee. At the same time, persistent foreign institutional investor (FII) outflows had also weighed on investor sentiment.
In that context, FCNR(B) inflows have been reasonably strong, particularly towards the end of July, and more inflows are expected over the next few months, Upadhyaya said as he believe such developments should help ease some of the pressure on the currency and stabilise the rupee against the dollar.
"At the margin, the foreign institutional investors have also turned positive and have started to buy. It may be too early to say that the trend has changed for the medium term, but nevertheless, we have seen a little bit of buying from foreign institutional investors in the past few weeks," Upadhyaya said.
Upadhyaya on private banks
Upadhyaya said he is making a conscious decision to increase exposure to private banks in his Flexicap fund and also to increase weights across other financials over the last twelve months.
"If you look at our portfolio a year back, you would have noticed that we were almost five to six per cent underweight to banking and financial services. That underweight positions, we have been gradually bridging, and currently we are close to neutral, I would say. We do get comfort the fact the credit growth has been continuing to grow at around 17 per cent year-on-year basis," Upadhyaya said.
He said, month-on-month basis, the credit growth numbers have been going up, which benefited NBFCs and public sector banks, to a large extent in the last year.
The issue with private sector banks earlier was the fact that they were finding it difficult to mobilize deposits. There was a scramble for low-cost deposits and also some of the regulatory guidelines, that constrained them from growing at higher pace.
"Now that FCMRB money is coming into the country, I think the problems on the deposit side should meaningfully go down over the next several quarters. The other concern that most people had on private sector banks, which has played out is the fact that while interest rate cuts were happening, there was pressure on net interest margins. And as we sit today and discuss, we do not expect further interest rate cuts in the economy," Upadhyay said.
Upadhyaya on IT sector
On IT sector, Upadhyaya said it is too early to say that things have started to improve for the industry. That said, valuations have become quite inexpensive and, from time to time, one may see sharp rallies in the sector, Upadhyaya said.
In terms of business momentum, except for a few stocks in the sector, most of them have muted business growth, he said. "The margins, despite such a strong rupee depreciation, which is always a tailwind for margins in IT sector, has remained quite under pressure. So overall, uh, there doesn't seem to be anything significantly different that we expect from the IT sector as a whole, and hence our positioning is actually an underweight position," Upadhyaya said.
Harsha Upadhyaya, Chief Investment Officer (CIO) and President, Equity, at Kotak Mahindra Asset Management Company on Tuesday said market sentiment has improved amid easing geopolitical tensions in West Asia. He added that the ongoing earnings season has offered some hope, as fears of a demand slowdown and margin pressure have largely not materialised. "Contrary to most expectations, where there was concern over weakening demand and margin pressure, that is not visible in most of the results we have seen during this earnings season," Upadhyay told BTTV in an exclusive interview.
While another two weeks are left for the June quarter earnings season to conclude, the Kotak AMC CIO said the delivery of numbers have been better than what the market was expecting, which is positive.
Upadhyaya said stock investors were primarily concerned about the West Asia conflict due to the volatility in energy prices and its potential impact on the rupee. At the same time, persistent foreign institutional investor (FII) outflows had also weighed on investor sentiment.
In that context, FCNR(B) inflows have been reasonably strong, particularly towards the end of July, and more inflows are expected over the next few months, Upadhyaya said as he believe such developments should help ease some of the pressure on the currency and stabilise the rupee against the dollar.
"At the margin, the foreign institutional investors have also turned positive and have started to buy. It may be too early to say that the trend has changed for the medium term, but nevertheless, we have seen a little bit of buying from foreign institutional investors in the past few weeks," Upadhyaya said.
Upadhyaya on private banks
Upadhyaya said he is making a conscious decision to increase exposure to private banks in his Flexicap fund and also to increase weights across other financials over the last twelve months.
"If you look at our portfolio a year back, you would have noticed that we were almost five to six per cent underweight to banking and financial services. That underweight positions, we have been gradually bridging, and currently we are close to neutral, I would say. We do get comfort the fact the credit growth has been continuing to grow at around 17 per cent year-on-year basis," Upadhyaya said.
He said, month-on-month basis, the credit growth numbers have been going up, which benefited NBFCs and public sector banks, to a large extent in the last year.
The issue with private sector banks earlier was the fact that they were finding it difficult to mobilize deposits. There was a scramble for low-cost deposits and also some of the regulatory guidelines, that constrained them from growing at higher pace.
"Now that FCMRB money is coming into the country, I think the problems on the deposit side should meaningfully go down over the next several quarters. The other concern that most people had on private sector banks, which has played out is the fact that while interest rate cuts were happening, there was pressure on net interest margins. And as we sit today and discuss, we do not expect further interest rate cuts in the economy," Upadhyay said.
Upadhyaya on IT sector
On IT sector, Upadhyaya said it is too early to say that things have started to improve for the industry. That said, valuations have become quite inexpensive and, from time to time, one may see sharp rallies in the sector, Upadhyaya said.
In terms of business momentum, except for a few stocks in the sector, most of them have muted business growth, he said. "The margins, despite such a strong rupee depreciation, which is always a tailwind for margins in IT sector, has remained quite under pressure. So overall, uh, there doesn't seem to be anything significantly different that we expect from the IT sector as a whole, and hence our positioning is actually an underweight position," Upadhyaya said.