Rajesh Singla, CEO & Fund Manager, Alpha AMC, believes the defence story remains structurally strong, while he recommends approaching the IT sector as company-specific bets.(Alpha AMC)AI Quick ReadExpert view on markets: Rajesh Singla, CEO and Fund Manager, Alpha AMC, believes the defence story remains structurally strong due to increased government spending, emphasis on indigenisation, and export opportunities. For IT, he believes AI (artificial intelligence) is changing the nature of demand, so investors should approach the sector as company-specific bets. In an interview with Mint, Singla also shared his views on the current market structure, the impact of the US-Iran conflict, and earnings expectations. Edited excerpts:
The market has done a fair bit of heavy lifting already. Valuations in several pockets, especially mid and small caps, are no longer cheap.
So, expecting a straight-line rally from here may not be realistic. After the recent rally, valuations have moved ahead of fundamentals in a bunch of pockets.
Rather than a broad-based rally, we are more likely to see selective performance driven by earnings visibility and sector-specific tailwinds.
A consolidation phase is more likely without outperformance being crowded out by companies that remain profitable. For continued growth, you will need support from both sides:
● Stability in global cues
● And consistency in domestic earnings growth
This is a market where returns won’t come from riding the index, but from identifying the right opportunities early.
The immediate impact is largely through crude oil. India imports more than 80% of its oil needs, so any sustained rise will affect inflation, the currency and corporate profit margins.
However, if the situation does not develop into long-term disturbances, the impact will remain cyclical rather than structural. India's domestic growth continues to drive consumption, capital expenditure, and financing.
For investors, the takeaway is simple: don’t react to headlines, track how it translates into earnings and costs.
Geopolitics creates volatility, but markets eventually anchor back to earnings. The immediate impact is more sentiment-driven than structural.
The IT sector is in the middle of a shift, not a slowdown. AI is changing the nature of demand. Automation may reduce some traditional services, but it is also creating new opportunities in areas like data, cloud, and digital transformation. So this is no longer a sector call; it’s a company-specific call.
Investors should focus on:
● Firms that are investing in AI capabilities
● Companies with strong deal pipelines
● Players moving up the value chain
Every disruption creates a new set of winners. The challenge is identifying who adapts faster.
The defence story remains structurally strong; government spending, indigenisation, and export opportunities are real tailwinds. But the easy money has already been made.
Valuations in many defence stocks are now factoring in future growth. From here, returns will depend on execution and earnings delivery, not just narrative. Defence is still a long-term story, but investors need to be far more selective at current valuations.
Q4 earnings are expected to be steady, but not uniform across sectors. Sectors sensitive to crude, like aviation, paints, logistics, and parts of FMCG, could see margin pressure if oil remains elevated.
On the other hand, banking, capital goods, and select manufacturing segments may continue to show resilience. So the recovery is happening, but it’s uneven and slightly delayed. It is not a weak earnings cycle; it is just not a broad-based one.
This is not the time for aggressive one-sided bets.
The most practical strategy would be:
● Maintain core exposure to quality listed equities
● Avoid chasing overvalued pockets
● And importantly, look beyond public markets for alpha
Today, a lot of value creation is happening before companies become widely tracked in SMEs, pre-IPO businesses, and early-stage sectors.
That’s why investors are gradually allocating through structured routes like Category I AIFs, which provide access, research, and better risk management.
Generating alpha today requires going where the market hasn’t fully priced in growth yet. Listed markets offer stability, but early-stage access is where disproportionate returns come from.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.