Market Expert Neeraj Dewan Sees Value in PSU Banks and CVs, Cautions on IT

Market expert Neeraj Dewan of Quantum Securities has shared his outlook on key sectors, highlighting specific opportunities and risks for investors. His analysis points to continued strength in public sector banks and the commercial vehicle cycle, while signaling a need for careful stock selection in the volatile information technology space.

State Bank of India and PSU Banks Remain Attractive

Dewan maintains a constructive view on public sector undertaking (PSU) banks. He points to their consistently strong earnings performance over recent quarters as a primary reason for optimism. This strength stems from improved asset quality, with bad loans declining significantly, and healthy growth in net interest income.

Despite a strong rally in their share prices, Dewan believes valuations for many PSU banks remain reasonable compared to their private sector peers and their own historical averages. Within this group, he specifically highlights State Bank of India (SBI) as a standout. He views SBI as a “buy-on-dips” opportunity, suggesting that any short-term market weakness leading to a lower share price could be a good entry point for long-term investors.

Commercial Vehicle Sector Benefits from Capex Revival

Another area of optimism for Dewan is the commercial vehicle (CV) sector. He links this positive view to improving capital expenditure (capex) trends across the Indian economy. As the government continues to invest heavily in infrastructure projects like roads, ports, and railways, the demand for transportation increases.

This rising demand directly benefits commercial vehicle manufacturers. Companies that produce trucks and buses are seeing stronger order books. Dewan’s outlook suggests this cycle has more room to run, driven by sustained government spending and a gradual recovery in private sector investment. This makes companies in the CV supply chain potential candidates for investor portfolios.

Information Technology Sector Requires Caution

In contrast to his views on banks and autos, Dewan advises a cautious approach toward the information technology (IT) sector. He cites ongoing volatility and uncertainty in the sector’s key markets, particularly North America and Europe. Clients in these regions are still scrutinizing their technology budgets, leading to delays in decision-making and project ramp-ups.

Beyond short-term cyclical challenges, Dewan points to a potential structural headwind: artificial intelligence (AI). The rapid rise of generative AI could disrupt traditional service models for IT companies. While AI also presents new opportunities, the transition phase may pressure revenue growth and margins for firms that are slower to adapt. Investors may need to be highly selective, focusing on IT companies with strong AI capabilities and resilient business models.

Overall, Neeraj Dewan’s analysis provides a roadmap for sector-specific investing. It underscores the importance of looking at underlying fundamentals like earnings, valuations, and macroeconomic trends rather than following broad market momentum.