This $3 billion fund CIO sees a brighter second half for markets, picks sectors to watch

Mahesh Patil, Chief Investment Officer at Aditya Birla Sun Life AMC, which manages assets worth over $3 billion, expects the Indian market to pick up momentum in the second half of the year, supported by stronger earnings and macro stability.

The current investment climate, he believes, favours domestic-oriented sectors over global plays due to ongoing external uncertainties, particularly around tariffs.

He expects rural consumption to pick up, supported by strong volume growth in agrochemical companies, which are likely to post solid quarterly results. A favourable monsoon and good sowing season should further lift the rural economy and aid overall consumption. Discretionary spending is also expected to gradually recover ahead of the festive season.

“That (rate cut) should help some of the interest rate plays especially... the NBFCs, in particular, should see a better growth, not only but also improvement in the margins,” he noted.

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In the IT sector, Patil noted that global concerns had led to early underperformance. But with recession fears in the US easing and IT companies suggesting that the worst is over, stability is returning. While volume growth is likely to remain subdued, “the downgrade cycle seems to be behind... the cross-currency impact also could be slightly positive, at least in this quarter,” he said.

Though mid- and small-cap IT stocks remain expensive compared to historical levels, he believes the sector is poised for a rebound if there are positive surprises in company commentary.

Patil sees an improved outlook on oil marketing companies (OMCs), helped by stable crude prices around $60 per barrel. “PSU oil marketing companies are likely to see a better kind of margins, marketing margins, although the refining margins have also actually improved a bit,” he said.

While falling crude prices are beneficial, the real impact will depend on how demand evolves. Broader macroeconomic indicators also look favourable. “After many years, we’ve seen that the current account deficit was in surplus,” Patil noted, attributing this to a combination of lower oil prices, stronger exports, and robust remittances. He believes this macro stability bodes well for foreign investment inflows into India.

For full interview, watch accompanying video

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