IT: Oversold in the Short Term, Uncertain in the Long Run
With IT stocks witnessing a sharp selloff, the big question is whether the correction has gone far enough to justify fresh buying.
Dewan believes the recent fall may have been excessive in the near term. “Yes, actually the kind of selloff that we have seen in IT, the shorter term maybe it is overdone. All the concerns which one could think of are priced in. So, from a trading perspective there may be some bounce back, some small trading opportunity, but over the medium to long term still the disruption that is going to come from AI is real and even the companies themselves do not know to what extent that can go to. Till we really hear something more from the companies and some more information which is going to come our way, we cannot take a case for investment for a medium to long term. So, definitely in the shorter term, I say a trading bounce back is possible because it has been overdone.”
In essence, while traders may find tactical opportunities, long-term investors may need greater clarity on how artificial intelligence reshapes business models and margins.
Solar Stocks: Sharp Fall May Be an OpportunitySolar and module manufacturers faced pressure after the US imposed a steep 126% duty. Despite companies suggesting limited impact, stock prices corrected 5–10%.Dewan noted that one of the major players clarified during its concall that the duty may not materially hurt operations. “I think because even Waaree—I read somewhere post the concall some comments I read—that they had specifically said that there would not be any impact because the cells that they are using are not from India or some reason they gave and plus US exports are just 15–16% of their total turnover, so that also is not such a big contributor and I feel that the kind of fall that we saw in some of these companies may be an opportunity for the medium to short term.”The reaction, he implied, may have been sharper than warranted by fundamentals.Metals: Buy on Dips, Don’t ChaseThe metals space, after a solid run-up, continues to attract attention. Dewan believes corrections in the sector should be used strategically.
“I feel that the metal space is one space where when you get meaningful correction, they should be bought into. We saw good correction happening in some of these metal names, whether it was copper or aluminium, they corrected meaningfully from the top that they saw. There is definitely opportunity there.”
He added that global demand dynamics, particularly from the US amid new factory setups, could remain supportive. Interestingly, while he was earlier more constructive on non-ferrous metals, valuations in the ferrous segment now appear more reasonable after recent moves.
“Metal is one space one should look at for opportunities, but one should not be chasing because you will get opportunities. It is going to be a volatile space because from the bottom, they have picked up a lot. You see stocks like Hindustan Copper, the kind of movement that they have given in the last five-six months has been tremendous. So, there is no point chasing them, but whenever you get a meaningful deep correction, it is an opportunity.”
GLP-1 and Pharma: Structural Positivity, Tactical CautionThe GLP-1 segment has sparked considerable excitement, with companies like Biocon and Zydus Life lining up launches, particularly targeting the US market.
Dewan acknowledged the scale of the opportunity but flagged competitive intensity. “Yes, there are so many companies which have filed for GLP-1 and there are so many launches also coming. India may also be a big market for them, with diabetes and obesity present. So, I think that market is big, but then what kind of competition will come and at what price level and what margin they will be operating on is very difficult for me to judge right now.”
However, his broader stance on pharma remains constructive. “But I am positive on pharma as a space. I feel that in pharma, companies into API and CRAMS are the companies which have a good future and the kind of growth that we are seeing in CRAMS is great; some of the companies are even growing 30–40% with a small base. So, I am positive on Indian pharma, but specifically GLP-1—with so many launches lined up and coming in the next six months, one year, two years—it is difficult to take a call right now.”
Defence: Long-Term Story Intact, Rerating May PauseOn defence, Dewan pointed to solid execution by Bharat Electronics Limited, which boasts a substantial order book.
“See, BEL has been very good in execution. Defence as a space definitely will grow. But if you say the space will rerate from these levels, it is very difficult to say, or it is difficult for it to rerate right now because it has already rerated. So, someone looking at big returns will be disappointed in the short term.”
He emphasized patience. “Defence is one space one needs to invest in and stay for the longer term because the government budget is going up—whether it is 15%, 17%, 20% every year—and as soon as you see execution picking up, definitely earnings will also improve and valuations will also look better. So, defence is the space to be invested in for the longer term. You use opportunities whenever there is correction, whenever there is news flow or whenever there is some disappointment on execution, you will get those corrections to buy into them. But for the short term, maybe looking at big returns will not be possible.”
