Banking, insurance, IT, realty shares could offer high returns post Q1 earnings season; here's why

Banks, insurers, IT and real estate are emerging as the most compelling pockets of the market after the June-quarter earnings season, according to Sharad Awasthi, Head of Research, Private Client Group at SMIFS Securities, who argues that valuation comfort and improving execution visibility are creating fresh opportunities even in a range-bound market.

Awasthi’s latest sectoral preferences come at a time when benchmark indices have remained under pressure, while broader market segments have continued to attract domestic flows. Against that backdrop, his Q1 reading suggests investors may need to look beyond headline index weakness and focus on earnings-backed stock selection.

Banks lead the earnings pecking order

Awasthi said banks were among the clearest outperformers in the quarter, with the broader BFSI pack benefiting from robust advances growth and improving operating trends. “Banks certainly looked very good this quarter,” he said, adding that even the NBFC space “looked good.”

Within private lenders, he singled out HDFC Bank, saying “the valuation comfort is very high there, and the numbers should continue to improve.” Axis Bank, too, is back on the radar after a correction, with Awasthi arguing that valuation support makes it “a good idea to look at on the private side.”

Insurance offers value, IT becomes a contra call

Beyond lenders, Awasthi sees insurance as a broad-based value play. “Across the board, when I look at insurance stocks, they look like decent bet at these valuations,” he said, indicating that the sector’s appeal lies less in momentum and more in pricing comfort after a period of muted enthusiasm.

IT, meanwhile, is being framed as a contrarian opportunity rather than an immediate earnings trade. Awasthi said deal wins have remained healthy and that “once that execution happens over the next two, three quarters, you could see a lot of rerating there.” That suggests the sector may be entering a phase where order-book strength begins translating into earnings upgrades.

Real estate moves into focus

One of the sharper calls from Awasthi’s Q1 assessment is real estate, a space he said his team is “aggressively looking at.” His argument rests on both pipeline visibility and valuation support.

According to him, the gross development value, or GDV, of many listed developers is now significantly higher than their historical execution base, pointing to a stronger medium-term revenue runway. “Valuations are also attractive,” he said, adding that the sector “could do very well.”

Broader market message

The larger takeaway from Awasthi’s market view is that earnings resilience is beginning to outweigh macro anxiety. In the broader discussion, he also flagged a strong capex cycle and the prospect of urban consumption revival as supportive trends for the next few quarters. For investors, that makes Q1 less about chasing momentum and more about identifying sectors where earnings, balance-sheet strength and valuations are aligning at the same time.