3 Sectors That Can Lead Market Recovery: Information technology, Metals, and Telecom – Whitespace Alpha’s Puneet Sharma
Information technology :The stock market has been through a turbulent phase, with indices seeing significant corrections. However, Puneet Sharma, CEO and Fund Manager at Whitespace Alpha, believes that a market recovery is on the horizon. In an exclusive interview with Moneycontrol, he identified three key sectors that could lead the rebound: Information technology, metals and mining, and telecom.
Market Nearing a Bottom?
The equity markets have been under pressure, with large-cap indices falling over 15% from their all-time highs. The decline has been even sharper in mid- and small-cap stocks, which have corrected by over 21.4% and 25.4% respectively. While volatility may persist due to global and domestic factors, Sharma believes that the markets are approaching a bottom.
“In the medium term, current prices are attractive for investors looking to enter equities. Short-term fluctuations are part of the market cycle, but a long-term, well-diversified portfolio with a focus on large caps should deliver strong returns,” he stated.
Global vs. Domestic Cues: What Will Drive Markets?
Indian markets have historically been influenced by global factors, though their impact was often limited. However, recent trends suggest that Indian indices are moving in sync with global markets, with similar magnitudes of corrections.
“With rising policy rates, trade tensions, and geopolitical uncertainties, global events will continue to play a crucial role in shaping the market’s direction until at least the first half of 2025,” Sharma explained.
He also pointed out that domestic companies have faced slower growth and margin pressures in recent quarters. As a result, global trends—especially in sectors like Information technology and metals—will significantly influence investor sentiment.
Investment Opportunities After Market Correction
With the Nifty 50 down 15.8%, and mid- and small-cap indices correcting further, Sharma sees investment opportunities emerging in select sectors. Banking and financial services remain attractive, along with metals and industrial products, which he expects to perform well in FY26.
Limited Upside in PSU Sector
Sharma remains cautious on PSU stocks, stating that they may not offer significant value upside. PSU banks, in particular, have been hit hard in the recent market downturn.
“We anticipate a shift in capital flows from PSU banks to private banks. Additionally, energy-related PSUs, including oil marketing companies, remain highly dependent on oil price fluctuations. Given these challenges, we do not see much upside in the PSU sector,” he said.
Which Sectors Will Drive Market Recovery?
According to Sharma, three sectors are well-positioned to lead the next phase of market recovery:
- Information technology Companies: The sector has seen some correction but remains strong in the long term due to increasing global digital transformation and AI-driven growth.
- Metals and Mining: These companies are likely to benefit from rising global commodity demand and infrastructure spending.
- Telecom: The sector is expected to gain from the 5G rollout, increased data consumption, and improving financials of major players.
He also highlighted private sector banks as another area of interest, as investors seek stability in a recovering market.
Will Capex and Growth Pick Up in FY26?
Sharma expects capital expenditure (capex) and economic growth to be sector-specific rather than broad-based in FY26.
“While Information technology, metals, and telecom companies are likely to see increased investments, the overall growth momentum will vary across industries. Additionally, we anticipate revenue growth in consumer goods and discretionary spending sectors,” he added.
Financial Ratios and Sector Performance
| Sector | P/E Ratio | P/B Ratio | ROE (%) | Expected Growth FY26 |
|---|---|---|---|---|
| Information technology | 25.3 | 6.8 | 20.5 | Strong Recovery |
| Metals & Mining | 12.7 | 1.9 | 14.2 | Moderate to High |
| Telecom | 18.2 | 3.5 | 17.8 | High Growth |
| Private Banks | 16.5 | 2.9 | 16.0 | Strong Upside Potential |
| PSU Sector | 10.1 | 1.5 | 10.8 | Limited Upside |
Conclusion
Despite ongoing market volatility, Puneet Sharma remains optimistic about the medium-term outlook. He believes that Information technology, metals, and telecom stocks will drive the next leg of the market recovery, while PSU stocks may not offer much upside. Investors with a long-term perspective and a well-diversified portfolio are likely to benefit from current market valuations.
As global and domestic trends shape the economic landscape, sector-specific opportunities will emerge, making it crucial for investors to stay informed and act strategically.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.