Copper, aluminium, crude oil and silver have all witnessed sharp declines over the past few sessions, dragging commodity stocks lower. However, Kant believes such corrections are a normal part of long-term commodity cycles.
“Commodity as an asset class is always like this. Whenever the upside is there, it continues for one or two years. We have already seen a major part of the upcycle, and normally it corrects and consolidates for a meaningful period,” he said.
According to Kant, demand fundamentals remain favourable. He expects industrial demand for metals such as aluminium, copper and zinc to strengthen as global economic activity improves. Silver, too, continues to enjoy structural support due to its widespread use in electric vehicles, electronics and renewable energy.
“Silver demand has an industrial connotation. Electric vehicles, electronics and solar panels all use silver, and demand is likely to compound at 15-17% CAGR going forward,” he said.
Given this backdrop, Kant believes quality commodity companies deserve fresh attention.”This is a good opportunity to accumulate good-quality commodity stocks. One can look at Hindalco, Vedanta and JSW Steel. We still believe there is at least one to one-and-a-half years of the upcycle left,” he added.Lower Crude Prices to Aid Corporate MarginsKant also expects the sharp decline in crude oil prices to provide a meaningful boost to corporate profitability over the coming quarters.
He noted that while companies may see some impact in the June quarter, the benefits of lower input costs should become much more visible during the second half of the financial year.
“Q2 and Q3 will have the benefit of lower input costs, but price rollbacks never happen. That will support better profitability in the second half of the year,” he said.
He also believes easing tariff concerns and resilient domestic demand have strengthened India’s macroeconomic outlook.
“Our ground checks suggest there has been no let-up in consumption, credit demand or collections. Credit growth itself will be around 17-18%, and these indicators suggest this is the time to be bold with cherry-picking,” Kant said.
Defence Story Remains IntactDespite recent volatility in defence stocks, Kant remains optimistic about the sector’s long-term prospects. While he is less constructive on Bharat Dynamics, he continues to favour Bharat Electronics (BEL), Hindustan Aeronautics (HAL) and Mazagon Dock Shipbuilders.
Recent selling pressure, he said, has largely been driven by trading positions and news flow rather than any deterioration in fundamentals.
“It is a no-brainer if you are looking from a three-year perspective. HAL, BEL and Mazagon Dock remain strong long-term plays,” he said.
Kant also highlighted the potential of the long-awaited P-75 submarine project, which could significantly expand Mazagon Dock’s order book and transform its growth trajectory.
Cautious on AI-Themed StocksOn India’s artificial intelligence investment theme, Kant advised investors to separate genuine long-term opportunities from market narratives.
Discussing Sterlite Technologies, he acknowledged the company’s strong order book but questioned the sustainability of its business model.
“There is no IP or moat in the business. It has largely remained a trading play over the last 10-15 years, so we are staying away from the fundamental call,” he said.
Banking Preferred Over Auto and AncillariesAmong sectors that could benefit from lower crude prices, Kant prefers banking and financial services over automobiles and auto component manufacturers.
While paint companies have already recovered significantly from recent lows, he believes expensive valuations and intense competition limit their upside. Auto and ancillary companies, meanwhile, could struggle because of a high base effect in the second half of the year.
“If you are looking at a one- or two-year perspective, they may find it difficult to deliver 20-25% profitability growth. It is a tactical call to stay away for now,” he said.
Instead, he believes banking remains the strongest indirect beneficiary of improving macroeconomic conditions and lower energy prices, making it one of the preferred sectors for investors over the coming quarters.
