According to him, the best opportunities currently lie in micro-cap stocks, followed by small-caps, mid-caps and then large-caps.
Despite concerns over oil prices, geopolitics and foreign fund flows, Tandon said the current market environment favours thematic investing.
“Ignore the indices movement, you just focus on the stocks,” Tandon said.
Tandon remains constructive on asset-heavy businesses linked to infrastructure and energy transition. He said companies with exposure to power and related segments stand to benefit from the growing demand created by the expansion of data centres.
The fund house has also been positive on cable and connectivity-related companies, which are beneficiaries of rising investments in digital infrastructure. According to him, telecom companies have not fully participated in the rally and could emerge as another important theme.
He believes the data centre opportunity is still in its infancy and could become a significant driver for several businesses over the coming years.
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However, he cautioned that valuations in many stocks have become expensive and investors need to be selective. “These names will be buy on dips rather than sell on rallies,” he added.
Tandon also believes India could gain if some other emerging markets witness consolidation. He sees signs of excessive optimism building in markets such as Korea and Taiwan and expects any correction there to potentially redirect capital towards India.
On sectors to avoid, Tandon remains cautious on kitchen appliance and consumer manufacturing companies. He said revenue growth in the segment has been modest over the last few years and current valuations do not offer enough comfort.
Instead, he prefers themes such as power and capital goods, where investor interest remains strong and earnings visibility appears better.
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