Market Expert Sandip Sabharwal Highlights Selective Defence Bets and Value Picks Ahead of Budget

As India prepares for its upcoming Union Budget, market voices are offering their sector-specific insights to guide investors. Prominent market expert Sandip Sabharwal has shared his views on several key industries, from defence to consumer goods, providing a roadmap for potential opportunities and cautionary notes.

Selective Approach Recommended for High-Flying Defence Stocks

Sabharwal has urged investors to be selective when considering investments in the defence sector. This segment has been a major beneficiary of the government’s push for indigenisation and has seen significant stock price appreciation. He suggests that the broad-based rally may not be sustainable for all companies. Investors should now focus on firms with strong execution capabilities, healthy order books, and robust financials. The budget is expected to continue its focus on domestic manufacturing, making selective stock-picking crucial for capturing future growth while managing risk.

Commercial Vehicle Cycle Presents a Strong Investment Case

Turning to the automobile industry, Sabharwal notes that the commercial vehicle (CV) cycle is in a strong phase. This strength is driven by a recovering economy, increased infrastructure spending, and the replacement of older vehicles. Within this space, he finds Tata Motors’ commercial vehicle business more attractive than that of Ashok Leyland. This preference may be based on factors like market share dynamics, product portfolio strength, or valuation metrics. The supportive cycle indicates potential for sustained demand, making well-positioned CV makers a segment to watch.

ITC Seen as a Stock with Value and Moderate Return Potential

Among large-cap consumer staples, Sabharwal identifies value in ITC. The conglomerate, with its dominant cigarette business and growing FMCG, hotel, and paperboard divisions, has often traded at a discount to its peers. Sabharwal’s view suggests that the current market price may not fully reflect the company’s stable cash flows and diversification efforts. While he expects moderate rather than explosive returns, this assessment positions ITC as a potential defensive play with steady upside in a volatile market.

Caution Expressed on Swiggy’s Profitability Path

Expressing skepticism on the new-age tech space, Sabharwal highlighted challenges for food delivery giant Swiggy. He pointed to intense competition in the sector and overarching growth challenges as significant hurdles to achieving profitability. This view underscores a broader concern about cash-burning business models in the consumer internet space, where customer acquisition costs remain high and pricing power is low. For investors, this serves as a reminder to scrutinize the path to profitability for high-growth tech companies.

In summary, Sandip Sabharwal’s pre-budget analysis paints a picture of a nuanced market. It advocates for selectivity in hot sectors like defence, highlights cyclical opportunities in commercial vehicles, spots value in established giants like ITC, and urges caution on the profitability narrative of certain new-age companies. For investors, these insights provide a framework to navigate the markets amid budget-related expectations and global economic crosscurrents.