Carnelian's Manoj Bahety Identifies IT, Auto, BFSI as Attractive Contrarian Investment Opportunities

Manoj Bahety, Founder and Fund Manager at Carnelian Asset Management & Advisors, has identified IT, auto commercial vehicle, and BFSI sectors as attractive contrarian investment opportunities where valuations remain comfortable and growth visibility appears strong. Speaking in an interview with Moneycontrol, Bahety expressed optimism about growth-oriented measures continuing to receive support from both monetary and fiscal policies in Union Budget 2026.

Sectoral Investment Opportunities

IT Sector Outlook

The IT sector presents particularly compelling opportunities on a 3-5 year investment horizon, according to Bahety. He notes that IT companies continue to maintain strong margins while large-cap names are now trading at reasonable valuations within their historical range.

Auto and BFSI Sectors

Bahety categorizes auto and auto ancillaries as part of consumer discretionary, expecting earning upgrades driven by GST and income tax rate cuts coupled with lower interest rates. The BFSI sector is positioned to benefit from uptick in credit growth backed by lower interest rates, adequate liquidity, and revival in consumer demand.

Earnings Recovery Expectations

The fund manager believes the earnings downcycle has bottomed out, with recovery in discretionary consumption demand expected to be backed by monetary and fiscal stimulus measures. He anticipates that H2FY26 is likely to deliver positive surprises in terms of earnings performance, as the impact of fiscal and monetary stimulus typically comes with a lag.

Market Outlook and Investment Strategy

Bahety remains focused on sectors aligned with India's domestic growth story. Consumer and automobile stocks are expected to benefit from potential tax cuts, improving consumer sentiment, and gradual recovery in rural demand. Banks and NBFCs are well-positioned, supported by healthy credit growth, adequate liquidity, and lower interest rates along with healthy asset quality.

The fund manager expects an uptick in private capex backed by strong manufacturing demand. Healthcare and CDMO companies continue to offer strong structural growth opportunities as global players diversify supply chains and increase outsourcing. Power and capital goods sectors should see sustained momentum, backed by higher investments in infrastructure and manufacturing.

IPO Market Perspective

Regarding the IPO market, Bahety emphasizes the importance of investor discipline, noting that margin of safety was not favorable in recent IPOs. He advocates for careful evaluation of business model quality, earnings visibility and sustainability, along with margin of safety before making investment decisions.

Policy and Budget Expectations

For Union Budget 2026, Bahety expects growth-oriented measures to continue receiving support from both monetary and fiscal sides. Government spending is anticipated to remain robust, particularly on infrastructure development. He believes sustained reforms, improving ease of doing business, and clear focus on job creation will further boost confidence in the economy and strengthen the growth outlook.