Positive On Data Center-linked Stocks As Momentum Builds: Nuvama Institutional Equities

Ajouté : 2026-05-21

[00:00:00]digit margin seeing the street likes it.

[00:00:02]Let's welcome Shiv uh Dewan, the Managing Director and Head Institutional Equities of NuVama Institutional Equities who joins us on the show. Hi Shiv, good to see you when uh how are you feeling about the Indian markets?

[00:00:14]You know, pessimism is creeping in gradually and the naysayers are getting a little bit louder.

[00:00:19]At times, that's not a bad time to start allocating a larger proportion of money.

[00:00:24]What's your take? Headwinds ahead, but time to uh buy?

[00:00:29]Yeah, good afternoon and thanks thanks for having me on the show. Um yeah, no, I I believe that yes, there is there has been some pain Sorry, can you hear me?

[00:00:40]Yeah.

[00:00:41]Yeah, there there has been there there definitely has been uh something that we've been going through. Uh Okay, you don't All right. Go ahead, Shiv. Go ahead.

[00:00:54]Yeah.

[00:00:55]Um no, I think there has been some pain that we've been seeing we've been witnessing, but having said that, like you mentioned, I think valuations now for the markets in general have become a little bit better even whether you look at it up from on a market cap to GDP basis or a price to earning basis or even the relative premium to emerging markets. So, to that extent, I I do believe that the time is now starting to get uh better in terms of getting invested. Of course, I don't think you'll anyone will probably take a top-down view as yet. Uh it'll have to be more stock specific, more bottom-up.

[00:01:23]Um and um you know, that's that's what that's what we are also wanting for. Uh there are obviously certain sectors, certain stocks that we would probably prefer and and suggest and recommend to clients. Do you want to talk to us about these ideas of yours?

[00:01:38]Sure. So, I mean, look, the valuations for some of the sectors that I'm going to mention are are probably not totally compelling, but having said that, this is a market where people will pay a premium for visibility. Uh and uh so, I believe that some of these sectors uh still do have a play, uh you know, one is of course the whole power T&D space within the whole industrials pack. Um you know, despite the fact that uh valuations have been a little you know, a little expensive. The sector still offers very very strong visibility and because of the fact that you know, there is this whole renewable connectivity that we're talking about and the whole AI data center space that that these these players you know, sort of take a part in.

[00:02:16]They should do very well.

[00:02:18]The auto pack is another space that that we think you know, after a little bit of a down move in the last quarter is starting to come back. If you've seen the the numbers they've been fairly heartening.

[00:02:29]Of course, our belief is that the best way to play the auto sector is via the auto ancillary pack. So, you know, there are multiple stocks there that you can play with but whether it is internal combustion engines or it is EVs, I think there is a massive opportunity in that space and valuations are now are getting far more compelling.

[00:02:47]The third sector that we also like is chemicals. They are starting to now make a comeback. I think the anti-involutionary measures that China's taken has helped. Plus there is a currency tailwind and and there is a little bit of a you know, volume growth that we're now starting to see in in some of the chemistries. So, I think these are the three sectors that should definitely benefit.

[00:03:08]And then of course, there is one sector that most people you know, tend to discount at this point and that's the IT sector. Our feeling is that you know, the most of the pain has been borne by the sector. Valuations now have become very very compelling there and you know, I think that there is always going to be an opportunity for some of these domestic players to be system integrators for enterprises and and help in the overall in the overall process. And that's where I think some of our companies in India should do very well.

[00:03:40]Having said that, it's not it's not going to be a play for all the entire sector and you'll have to be picky in terms of which you know, which few stocks you take from that sector.

[00:03:49]Mhm.

[00:03:50]Not uh private sector banks. Shiv, most of the people that we speak to on the channel seem to suggest that private sector banks' valuations are something we've never seen before. Uh at least not in the last many, many years. You know, valuations here you would say are compelling.

[00:04:06]Uh I agree. I think valuations are definitely compelling. I I I I think this is a sector that people have always liked. Uh you know, because of the fact that you had balance sheets which are in the best possible shape over the last few years, not just not just this year.

[00:04:18]It's actually been over the last 2 3 years where you've seen great balance sheets.

[00:04:22]Uh but of course I think you know, with private banks the the one other aspect also to look out for is that you will need because of the large market caps you will also need you know, foreign institutional participation to sort of come through because most of the domestic institutional investors are typically you know, heavily owned on on these private banks.

[00:04:41]Got it. Okay. All right. Uh Uh Shiv, what about these new age themes? Uh you know, there was so much of excitement about them.

[00:04:50]And some of them have just fallen by the wayside. For the time being there's not too much excitement out there. And at times in environment when yields move up, discounting as well you know, is done at a higher rate, which obviously hurts some of these new age companies.

[00:05:02]What's your view?

[00:05:04]Well, I think the one thing to keep an eye on is that yes, while these new age companies have done you know, have done well in the past, for now our sense is that you know, there is a little bit of pain there in terms of visibility. We've not seen that kind of visibility that we've seen in in maybe some of the hard asset owners or you know, in in and that's a space that I think will probably trump over over the new over the new age players at the moment. I think if you talk to investors, clients, I mean they will tell you that today in India what is what is starting to look far more interesting is is the asset owner. So whether it's ports, airports, cement, you know, utilities. These are these are some of the spaces that people would you know, like to like to look at. We ourselves are far more constructive on that space currently, Uh uh, you know, rather than the new age players. I think that time will come, but, uh, you know, maybe a few quarters out.

[00:05:55]Shiva, I know, in the last 1 and 1/2 now nearly 2 years at the index level we haven't done too much, but there have been so many opportunities to make money.

[00:06:04]Uh, so I guess that continues and you've highlighted some of the themes that you like. But at an index level, because many people just invest uh, via the SIP in a Nifty ETF equivalent. Uh, what should they expect? What is your own assessment for the next 6 to 12 months?

[00:06:19]Do you see the markets giving returns?

[00:06:24]Uh, tough call there, but, uh, but I would say that, you know, look, valuations are definitely compelling.

[00:06:28]There will be uh, some sec or rather some stocks, uh, you know, in some sectors within the Nifty 50 or the or the Sensex 30, whatever you look at, uh, which will sort of deliver uh, for the you know, for the sort of uh, index.

[00:06:41]Uh, but, uh, there are also others which will probably play lagger. So, to my mind, over the next two to three quarters, uh, you know, I I I I think there could be some sort of sideways movement, but I believe that now the likelihood of positive bias is more so than a negative one. Uh, and of course, if the uh, geopolitical situation improves, then you could, uh, you know, then you could probably see a little bit of an impetus, uh, you know, starting up and then, uh, sort of plateauing out.

[00:07:06]Mhm.

[00:07:07]Shiv, what about this Indian rupee fall?

[00:07:10]You know, it's definitely hurting sentiment, but people are trying to find winners.

[00:07:15]Uh, what is your view first with regard to the rupee? Uh, if we see some stability, if we see a couple of measures that, you know, help uh, the rupee. How positive would it be? Point number one. Point number two is, have you managed to find any winners? Uh, you know, you already told us about tech and we'll see how, you know, that one plays out. But any other sectors that could be better placed because of the depreciation we've seen on the rupee?

[00:07:40]Uh, so first of all, yes, I think has uh, the depreciation definitely hurt you know the raw material the raw material part of most companies and and and obviously if that were to correct itself then the things could get much better for some of these sectors whether it's consumer or pharma or you know or even maybe maybe chemicals. Now on the other hand like I mentioned earlier that chemicals the exporters within the chemicals pack should definitely be beneficiaries. I think certain pharmaceutical names could also could also sort of benefit if this if the rupee were to start improving and this this pain has also resulted in in the fact you know for most for most foreign institutional investors just by virtue of holding on to their current investments that's been that's hurt them a little bit right because of the because of the rupee because of the rupee fall.

[00:08:31]If if the rupee fall it does get arrested and things start to get better I think I suspect that you should start to see you know some some some of them starting to come back. And that in overall should help sentiment as well.

[00:08:42]So I think there is an overarching theme as well that could play out if you know with rupee rupee fall were to get arrested.

[00:08:50]How are you hedging yourself Shiv if this war lingers on longer? It's been 12 weeks already there's still no resolution in sight. We've had multiple false start where our hopes have been raised only to be dashed one day later with a post on Truth Social. So if this war lingers on how are you hedging this portfolio?

[00:09:12]The one sector that we didn't speak about and which is obviously a sector that has been a has been a bellwether for a lot of for a lot of the domestic funds and and and for a lot of the players here has been FMCG. I think you've always seen volume growth that has been heartening but for the first time out now we are starting to see a little bit of a little bit of pricing growth coming back and that should definitely that should definitely benefit uh, the sector and and and also given the fact that it is one of those sectors which is not too volatile, uh, which will continue to see consumption growth slow and steady at at a pace that we like. So, that's one sector that we definitely want to be in. And the domestic consumption story whether whether it is whether it is auto auto lines like I mentioned or or even the cement plays which will have to which will sort of start to come back are the sectors that we think you know we would we would like. Obviously, I won't mention individual stocks but you know these are the spaces these are the sectors that we think you know someone could stay invested in.

[00:10:10]Uh, and if the if the war if the if we get a solution to the war then of course then there is a broader base to play on.

[00:10:17]Got it. Okay. All right. Thanks Shiv.

[00:10:19]Wishing you a good remainder of the day and we catch up soon. Thanks for giving us some of your thoughts on the markets as well as individual sectors.

[00:10:26]By the way, let's do a quick check on the F and