India’s equity markets may appear range-bound, but beneath the surface, a constructive setup is quietly taking shape. Sandeep Tandon, Chief Investment Officer of Quant Mutual Fund, believes that the next 6–12 months could see a significant turnaround in key sectors—particularly information technology (IT), pharmaceuticals, and fast-moving consumer goods (FMCG). In a recent interview, Tandon shared his bullish outlook, emphasizing that investors should remain invested in quality themes despite prevailing market noise.
Market Sentiment: Fear vs Fundamentals
Tandon pointed out that recent months have seen “unwarranted pressure” on Indian equities, largely driven by foreign institutional selling and global macro concerns. However, he argued that the broader backdrop—marked by improving domestic fundamentals and policy reforms—is ripe for a rebound.
“Even good news is being ignored due to fear in the system,” Tandon said. “But this is exactly the phase when investors should increase India exposure. The country has underperformed both developed and emerging markets, and the stage is set for an upside.”
Quant Mutual Fund, he revealed, is currently 98% invested across sectors, signaling strong conviction in the market’s potential. “This is a market where holding large cash makes little sense. Staying invested in quality themes like consumption, IT, and pharma is the way forward,” he added.
Sectoral Outlook: IT, Pharma, FMCG in Focus
Tandon’s optimism centers around three key sectors that he believes are poised for outperformance:
Information Technology (IT)
After a prolonged period of underperformance, IT stocks are showing signs of bottoming out. Tandon dismissed concerns around the HIRE Act and foreign worker taxes, calling them “overdone.” He expects earnings to stabilize by the September quarter and anticipates upgrades by December.
“With under-ownership and sentiment so negative, IT could outperform over the next 6–12 months,” he said. Tandon prefers large-cap IT names over midcaps due to better liquidity and valuation comfort.
Pharmaceuticals
Despite fears of potential U.S. tariffs, Tandon remains bullish on the pharma sector. He emphasized that Indian generic companies are indispensable to the global supply chain and that even U.S. pharma majors would struggle to replace them overnight.
“There is no substitute for Indian generics in the short term. In fact, Indian firms are now looking beyond the U.S. to Europe and other markets,” he said. Quant Mutual Fund is already fully invested in the sector, reflecting its long-held bullish stance.
Fast-Moving Consumer Goods (FMCG)
Tandon sees strong multi-year potential in FMCG, particularly in the food segment. He highlighted the recent GST rate cut from 18% to 5% on several food items, which he believes will push consumers toward branded products at better prices.
“This is a long-term rerating story that could drive earnings and valuations higher,” he said. While autos have also benefited from GST reforms, Tandon is more optimistic about FMCG due to its broader consumption base and pricing power.
Sector Performance Outlook
| Sector | 6–12 Month Outlook | Key Drivers | Preferred Segment |
|---|---|---|---|
| IT | Strong Upside | Earnings recovery, under-ownership, sentiment | Large-cap stocks |
| Pharma | Stable to Bullish | Global demand, supply chain indispensability | Generic drug makers |
| FMCG | Bullish | GST cuts, branded consumption, rural demand | Food and essentials |
| Auto | Moderate Upside | GST benefits, EV adoption | Passenger vehicles |
| Infra | Neutral | Policy support, execution risks | Urban infrastructure |
Retail Investors: The Silent Force
One of the most encouraging signs in the current market, according to Tandon, is the resilience of retail investors. Despite lackluster returns over the past year, monthly SIP (Systematic Investment Plan) inflows remain steady, showing no signs of nervousness.
“Retail investors have demonstrated patience and intent. They continue to back equities, even in mid- and small-cap segments. This is a very constructive sign for the market,” he said.
Tandon credited retail participation for providing leadership in the current cycle, especially as institutional investors remain cautious. He believes that this grassroots confidence will be instrumental in driving the next leg of the rally.
Investment Strategy: Stay the Course
Quant Mutual Fund is not adding fresh positions at the moment but remains fully invested. Tandon emphasized the importance of staying the course and avoiding the temptation to hold excessive cash.
“This is not the time to be defensive. Quality themes are available at reasonable valuations, and the macro setup is improving. Investors should focus on sectors with structural tailwinds and avoid chasing short-term momentum,” he advised.
He also cautioned against overexposure to speculative themes and recommended a balanced portfolio with exposure to consumption, healthcare, and technology.
Sectoral Allocation Strategy
| Asset Class | Recommended Allocation (%) | Rationale |
|---|---|---|
| IT | 25 | Recovery potential, valuation comfort |
| Pharma | 20 | Global demand, defensive play |
| FMCG | 20 | Consumption boost, GST benefits |
| Financials | 15 | Credit growth, stable earnings |
| Infrastructure | 10 | Policy support, long-term growth |
| Others | 10 | Tactical opportunities, diversification |
Macro Trends Supporting the Bullish View
Tandon’s outlook is supported by several macroeconomic trends:
- GST Rationalization: Lower tax rates on essential goods are expected to boost consumption.
- Stable Inflation: Controlled inflation provides room for monetary easing.
- Improving Fiscal Metrics: Government reforms and infrastructure spending are enhancing fiscal discipline.
- Global Diversification: Indian exporters are expanding beyond traditional markets, reducing geopolitical risk.
These factors, combined with strong retail participation and sector-specific tailwinds, create a favorable environment for equity investors.
Conclusion: A Constructive Setup for Equities
Sandeep Tandon’s analysis offers a compelling case for staying invested in Indian equities, especially in IT, pharma, and FMCG. While market volatility and global uncertainties persist, the underlying setup remains constructive. With improving macros, policy support, and resilient investor sentiment, the next 6–12 months could be pivotal for long-term wealth creation.
Investors are advised to focus on quality, avoid speculative bets, and maintain a diversified portfolio aligned with structural growth themes. As Tandon puts it, “This is the time to ride the wave, not wait on the shore.”
Disclaimer: This article is based on publicly available statements and market analysis. It does not constitute financial advice or investment recommendations. Readers are encouraged to consult certified financial advisors before making investment decisions.
