Hospitals and LIC Housing are the best bottom-up bets right now, says Varun Saboo

Markets are in what Varun Saboo, Head of Equities at Anand Rathi Shares & Stock Brokers, calls "a very tricky situation." Three macro variables, crude oil prices, the rupee, and rising global interest rates, are all moving simultaneously, and none of them are in India's favour right now. The Iran-US standoff adds a binary dimension: a de-escalation could trigger sharp reversals just as quickly as the recent selloff arrived.

In this environment, Saboo's prescription is clear: ignore top-down sector calls and go stock-specific. "Best is to be bottom-up and look at stocks which are safe right now in these times," he told ET Now.

IT sector: value is there, but wait for clarity

Large-cap IT stocks have corrected sharply enough that valuations, trading at 13 to 15 times earnings, are at levels rarely seen in the sector's recent history. The market is essentially pricing in significant earnings uncertainty, particularly around how AI disruption will reshape demand for traditional IT services.


"Most largecaps are trading between 13–15 times earnings. These are unheard of valuations," says Saboo.

The weaker rupee does provide a currency tailwind for exporters, and Saboo says Anand Rathi remains structurally positive on IT as a house view. However, he advises against a structural bet right now. The near-term play, if any, is tactical -for investors comfortable riding the currency move rather than making a long-term earnings call.

Pharma: the cleaner defensive bet

If IT is a tactical call clouded by AI uncertainty, pharma is the cleaner defensive. Generic pharma in particular benefits from the same currency tailwind as IT, but without the disruption overhang. Saboo sees it as relatively insulated from external shocks, which explains why money has been rotating into the sector even as broader markets remain choppy.

Two specific ideas Saboo is backing

Varun Saboo said the focus should be on identifying strong bottom-up ideas in the market. He believes the hospital sector remains an attractive space, with select pockets showing strong earnings visibility and reasonable valuations. According to him, investors should adopt a bottom-up approach and focus on stocks that appear relatively safe in the current environment.

The hospital thesis is rooted in operating leverage: the fixed costs of building and staffing new capacity are already sunk, so incremental revenue flows through to EBITDA at a high margin.

LIC Housing's structural advantage is the asset-liability mismatch working in its favour, as rates rise, the returns on its floating-rate loan book climb while its borrowing costs, locked in at three-year rates, lag behind.

Bottom line: In a market where the macro picture remains binary and headline-driven, Saboo's framework offers a practical anchor: ignore the noise, find businesses where earnings visibility is high and valuations have already priced in the bad news. Hospitals and LIC Housing, in his view, fit that description squarely.