Seth said financial stocks are positioned to benefit from improving economic conditions, continued credit growth and a potential pickup in corporate capital expenditure later this year. However, he expects investors to remain cautious on IT services as the impact of artificial intelligence (AI) continues to reshape the sector.
He noted that the rupee has outperformed several Asian currencies despite broader dollar strength, supported by the decline in oil prices and recent RBI measures.
“Clearly INR is showing strength, which is one of the ingredients of the confidence from a foreign investor perspective,” he said.
Seth expects foreign institutional investor (FII) sentiment towards India to improve, though he does not foresee a sharp surge in allocations. According to him, global equity flows remain concentrated in artificial intelligence-linked opportunities, particularly in markets such as Japan, South Korea and Taiwan.
Seth remains constructive on Indian financials, arguing that banks are supported by healthy credit growth trends, stable asset quality and margin prospects. He expects corporate capex activity to gain traction in the latter part of the year, which could further support the sector.
Seth said the market reaction to Accenture’s outlook highlights ongoing concerns about future revenue growth across the industry. While he believes Indian IT companies will eventually benefit from AI-led opportunities, he said the transition remains at an early stage.
According to him, investments and partnerships in AI have yet to materially contribute to revenues for most Indian IT services companies, with traditional business lines continuing to account for the majority of earnings.
Beyond equities, Seth remains positive on gold from a long-term asset allocation perspective. However, he expects some near-term pressure on precious metals due to evolving US Federal Reserve policy and a potentially more hawkish monetary stance.
He suggested investors maintain a mid-to-high single-digit allocation to gold within diversified portfolios.
Seth is also constructive on export-oriented sectors such as textiles. He believes benefits from recent trade agreements and currency trends could begin reflecting in export growth and operating leverage over the coming quarters.
However, he noted that investment opportunities in the textile sector are more suitable for stock-specific strategies rather than broad market allocations because of the limited size and liquidity of many companies in the space.
For the full interview, watch the accompanying video
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