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This theme looks set for a mean reverting catch up rallyRohit Seksaria, Sundaram Mutual, Chennai

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Sundaram Services Fund’s long term outperformance record (vs Nifty 500 TRI) remains intact despite underperformance over the last 1 year– which Rohit attributes to services as a theme underperforming manufacturing/industrials.

He however believes that with banks (the heavyweight in services) now looking poised for a mean reverting catch-up rally, services will get back to their historical position of outperforming the broad market.

BFSI takes up 41% of this fund’s portfolio and the largest overweight positions are in fixed rate lenders like NBFCs and SFBs, which Rohit says will enjoy expanding NIMs when the rate cut cycle commences.

Within banks, he prefers PSU banks as they are now back at 1x book value (vs 1.8x – 3x for private sector banks) with return and growth numbers coming in quite close to private sector banks.

He prefers holding niche midcap IT services players with strong growth visibility over the IT majors which he tactically booked profits in the recent IT sector rally.

Consumer discretionary services is an area Rohit is looking to increase exposure to, as green shoots of consumption revival are becoming more evident.


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