BTTV Exclusive | 3 stock investment themes Vaibhav Sanghavi is bullish on

Vaibhav Sanghavi, CEO at ASK Hedge Solutions, on Wednesday said investor sentiment has improved markedly over the past two months compared with the past one-and-a-half years, and that he sees the market turning much more constructive from a near- to medium-term perspective. In an exclusive interview to BTTV, he said ASK Hedge Solutions has turned bullish and shifted its overall portfolio to a net long position.

Sanghavi said ASK Hedge Solutions is positive on three investment themes: financials led by private banks and NBFCs, the data centre theme from a medium- to longer-term perspective, and CDMO as a play that could benefit from the tailwind of the BIO SECURE Act. He said the negatives that had weighed on the market earlier have now moved from neutral to positive.

According to Sanghavi, the market had remained subdued earlier because of the conflict in the Middle East, which had pushed oil futures to around $110 and spot prices to the $140-$150 range, creating a sizeable economic burden. He said India was also facing higher valuations and weakening earnings growth prospects, while the regional AI trade was playing out in markets that India was not part of. Taken together, these factors had kept domestic markets subdued and hurt sentiment.

He said each of those factors has changed over the past two months. On the Middle East, he said the risk situation remains volatile, but oil prices have seen what he described as a constructive decline and are now below $80. He said that if oil stays low, it would be favourable for the Indian economy. On earnings and valuations, he said that despite recent turbulence, earnings have remained robust and corporate commentary has also been encouraging. He added that market valuations have corrected, time correction has played out, and India's relative premium to the broader emerging market basket has reduced sharply.

Sanghavi also said investors are beginning to take a fresh look at India after recent moves in China, Taiwan and Korea linked to the AI trade. As evidence, he pointed to positive FPI flows over the past month. Referring to the government's steps on FCNR deposits, ECB and taxation on G-Secs, he said his sense is that the market could see greater strength ahead, along with a stronger rupee and more favourable macroeconomic conditions.

Among sectors, Sanghavi said the biggest positive change in the past two months has been in financials, especially private banks and NBFCs. He said developments around FCNR deposits could help bring in cheaper deposits, increase liquidity in the system, reduce the cost of funds and provide support to net interest margins. He added that credit growth has remained strong in recent quarters, supporting profitability as well as ROAs and ROEs, while FPI selling in financials has now ebbed.

He said the fundamentals in financials remain firmly in place, and that the catalyst from FCNR-related lower deposit costs should augur well for the sector over the next one to two years. Beyond financials, he said he is bullish on the data centre theme from a medium- to longer-term perspective, describing it as a 'pick and shovels' play focused on what goes into building and setting up data centres. He cited segments such as diesel gensets, transformers, chiller equipment, electrical equipment, switch gears and utilities.

On the data centre theme, Sanghavi said there are pockets where valuations are somewhat higher, but added that if growth continues to support them, the theme should continue to do well. He said CDMO is another area that should perform well because of the tailwind from the BIO SECURE Act.