Daily Voice: Market correction offers opportunity in four quality sectors, says Alpha Capital’s Mukesh…

The latest market report highlights that According to Mukesh Jindal, Senior Partner at Alpha Capital, high-quality banks are the cleanest investment opportunity at present. “Credit is running firm, asset quality is the best in a generation, and the Bank Nifty still trades at a much more reasonable multiple,” he stated in an interview with Moneycontrol.

Market participants should put their money into banks with a firm deposit franchise and a clean book rather than the most aggressive lenders, he advised.

Further, Jindal believes telecom is another obvious sector to consider, as the investment story has shifted from adding subscribers to monetising the existing customer base. “It is now a cash-flow story,” he stated.

Jindal additionally likes the defence and infrastructure sectors, as that is where capital expenditure is anticipated to be concentrated.

Do you see earnings growing in the range of 15–17 percent this fiscal year despite ongoing geopolitical tensions?

I would not treat 15–17 percent as a base case. It is the number the market was hoping for after a weak FY26, when Nifty earnings grew only around 5 percent. It is not the number I would underwrite today. Geopolitics is not a footnote. At $70–80 a barrel of oil, 15 percent is a reasonable working assumption. At $100–110 for any length of time, you should mentally mark that down. Every ten dollars on crude takes something off expansion and something off margins.

I would plan portfolios around 12–14 percent Nifty earnings, and treat 15–17 percent as the good case if West Asia cools and the indian rupee behaves.

Do you believe AI-led deflationary pressures on IT services firms will continue for at least the next 1.5–2 years, and is this more than just a volume-related offering?

Yes, it is more than a volume problem. Discretionary spend in the US and Europe will come and go. What will not come and go in the next 18-24 months is the pricing conversation. Clients can see that the same work needs fewer people, and they are walking into renewals with that number already in the bid.

We are hearing 10–15 percent deflation on large deals, and steeper cuts on some multi-year contracts. That is the billing model being rewritten. New AI work is real, but it is not large enough yet to replace what is being marked down in the legacy book. Large-caps will grow slowly. A few mid-tier firms taking share look better. IT still makes a lot of cash, but it might grow slowly until it can charge for results, not for heads. That shift may not be clear in the next year.

Do you think India stays in a challenging position for foreign market participants due to persistent geopolitical concerns?

Geopolitics is making the job harder for foreign market participants. I would not say it has put India in some long-lasting penalty box. Foreign market participants have taken out well over $25 billion this year, and something like $60 billion since the late-2024 peak. Ownership is down to marks last noted around 2009.

Oil above $100 a barrel, a softer indian rupee and elevated US yields are a poor mix for a current-account deficit country. That is us. But India was additionally expensive, earnings were soft for two years, and the world was paying market participants to sit in US AI. The index has not collapsed the way it would have a decade ago, because domestic institutions and SIPs have taken the other side. India is cyclically awkward for FIIs, not structurally closed. What FIIs control is the speed of any re-rating, not the existence of the market.

Which sectors or stocks would you look to add to your portfolio amid the current market correction?

I would add where the earnings are still visible, and the price has actually adjusted. High-quality banks are the cleanest place. Credit is running firm, asset quality is the best in a generation, and the Bank Nifty still trades at a much more reasonable multiple. Put money into names with a deposit franchise and a clean book, not the most aggressive lenders.

Telecom is the other obvious one. The story has shifted from adding subscribers to getting paid for the ones they have. That is a cash-flow story, which is what you want in a choppy market. I would be slower on IT. Cheaper is not the same as cheap if expansion is 1–3 percent.

I additionally like defence and infrastructure, as that is where capex is scheduled. Use this correction to mobilize the quality of the book, not to hunt in the speculative end just because the index has come off.

Do you see any significant risk to asset quality in the banking sector?

No. I don't see that at the system level. Banks have just printed the cleanest asset-quality numbers in decades. Gross NPAs are around 1.8 percent. Net NPAs are a fraction of that. Provisions have been falling because slippages have been falling. The RBI's own stress test does not take that ratio anywhere alarming over the next two years. That does not mean there is nothing to watch.

Unsecured retail had a messy patch and has been slowing, which is healthy. Gold loans are growing very fast; NPAs are still tiny, but any book that grows at that speed deserves more supervision. Agriculture is still the sticky corner. The bigger risk is not bad loans; it is funding — deposits have not kept pace with credit, so money is getting costlier.

Are you bullish on the insurance and banking sectors?

I am constructive on both, but more on banks. Banks are cheaper, the books are clean, and credit demand is showing up. Margins may not expand the way they did when rates were only going one way, and deposit costs are a real offering.

Even so, at something like 13 times earnings for the Bank Nifty, you are not paying a high price. Insurance is a longer story. Penetration is still low, and the GST change helps. I like the industry, but I am more immediate on banks.

Do you think the biggest question for the US market is the sustainability of the AI trade?

Yes. It is the biggest question, but not the only one. A handful of AI-linked firms account for a third of the S&P and have done most of the heavy lifting. Hyperscalers are pointing to something like three-quarters of a trillion dollars of capex this year. That spend is real, and the chip and cloud earnings have been real. That is why this is not 1999. Those businesses make money.

The question is whether the spend keeps earning its cost of capital once the first wave of capacity is built. If it stays a capex race with slow monetisation, you do not need the technology to fail for the stocks to have a problem. That changes how we hold the US, not whether we hold it.

Do you see inflation risks persisting as long as geopolitical tensions keep drive volatility in crude prices?

Oil keeps an upside risk on inflation. I would not say inflation stays high for exactly as long as the geopolitics stays noisy. The link is real, but it is messy. At $100-plus, if prices get passed through to petrol, diesel and freight, retail inflation can sit near 5 percent or a bit above — which is already how the RBI is writing FY27.

Every ten dollars on crude, if it reveals up at the pump, is roughly half a percentage point on CPI. Pump prices have been held even as the Indian crude basket crossed $100. That protects the CPI print and dumps the loss on the oil firms. You can do that for a while, not forever. Food is additionally doing as much work as fuel right now. So as long as crude stays expensive, the risk to inflation is skewed up, and the RBI has very little room to trimmed. That does not mean a 2011-style inflation problem is locked in.