Investors should use the current market phase to build exposure to largecap stocks, particularly IT services, private banks and manufacturing exporters, even as elevated crude oil prices and geopolitical tensions could keep broader market returns subdued in the near term, according to Manish Gunwani, Chief Investment Officer – Equity at Bandhan AMC, which managed equity assets worth ₹1.93 lakh crore as of September 30, 2026.
Gunwani said the recent outperformance of largecap stocks over midcaps and smallcaps reflects both a narrowing valuation gap and changing global market trends. He expects sectors linked to the artificial intelligence infrastructure build-out to remain under pressure, while areas that have lagged could benefit from a rotation in investor flows. He added that investors should focus on long-term opportunities rather than expect quick gains over the next few quarters.
“From a risk-reward perspective, IT services, private banks and manufacturing exporters are the spaces where we are overweight. Valuations are reasonable,” Gunwani said. He added that manufacturing exporters could benefit even if the pace of AI investments moderates because currency will be under pressure over the medium to long term.
Explaining the recent shift towards largecap stocks, Gunwani said the valuation gap between largecaps and smaller companies had become excessive. He also pointed to the changing composition of global equity markets, where the correction in AI infrastructure-related stocks has weighed on sectors such as capital goods.
“I think what we are seeing globally is that the AI infra trade is reversing to a certain extent,” he said, noting that power equipment stocks in the US and Europe, as well as markets such as South Korea, have also corrected.
Gunwani said investors may be underestimating the growth potential in the IT sector from artificial intelligence (AI) implementation projects. While legacy IT services businesses could continue to slow, AI-led services are expanding rapidly.
“There are two parts of the business. One part is the legacy business… and there’s an AI implementation business which is growing pretty rapidly,” he said. “At these valuations… it’s like heads you win and tails you don’t lose.”
Gunwani expects macroeconomic risks to remain a challenge for Indian equities over the coming months. He cited elevated crude oil prices and concerns around the monsoon as factors that could delay market gains, although he remains constructive on equities over the long term.
“We should buy this market, not with the view that next two-three quarters returns will happen,” he said. “I do think that we need a lot of patience to own this market.”
Gunwani said the valuation gap between private sector and public sector banks has narrowed significantly. While public sector undertaking (PSU) banks have improved their operating performance, he believes further outperformance over private banks may be limited because private lenders continue to generate superior returns on assets.
He also described telecom as a defensive sector with healthy cash generation but said its long-term growth potential is limited because smartphone penetration is already high. Gunwani said he remains positive on gold over the long term, expecting global liquidity support from central banks to eventually benefit the precious metal.
For the full interview, watch the accompanying video
Large caps offer better risk-reward than small caps now, says Bandhan AMC’s Manish Gunwani
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