IT a tactical buy; Devarsh Vakil reveals 5 sectors worth buying as markets turn volatile

Indian equity markets are in a state of flux, but one leading analyst says the window to invest is already open and investors who hesitate may regret it.

Devarsh Vakil, Head of Prime Research at HDFC Securities, told ET Now that the current market environment, while uncertain, is presenting genuine buying opportunities for investors with cash, conviction, and the courage to act.

The market is cheaper than it looks

Vakil's opening argument is straightforward: valuations have already corrected to attractive levels. At the March lows, the Nifty had fallen from around 23 times earnings, with only 5 to 6 percent earnings growth to justify those levels, to approximately 20 times earnings, which he describes as reasonable and below the long-term historical average.


Crucially, he expects Nifty aggregate earnings of around ₹1,250 per share, with earnings growth of 12 to 13 percent on the horizon. That combination of lower valuations and improving earnings makes this, in his words, "as good as any time to deploy capital."

April, he noted, was already one of the best months for markets in several years. He expects that momentum to return once the current bout of weakness passes.

5 sectors worth buying right now

When asked where a fresh investor should park cash today, Vakil was specific.

Power and renewables top his list. India's peak electricity demand hit an all-time high recently at 260.4 gigawatts, according to data from the Grid Controller of India, driven by record heat and surging air conditioner usage. Vakil believes this is a structural theme, not a seasonal blip, and says power utilities and capital goods companies in this space deserve a place in every investor's portfolio.

Banks and NBFCs are his second major pick. He sees strong earnings momentum in this space, with results either meeting or beating street estimates. Capital market plays within this broader financial sector are also attracting his attention.

Pharmaceuticals offer multiple entry points. Generic drug price erosion in the US has stabilised, making Indian pharmaceutical exporters more attractive again. MNC pharma companies operating domestically have also seen valuation corrections. His most exciting call within the sector, however, is GLP-1, the class of drugs behind blockbuster weight-loss treatments, which he describes as
a major long-term opportunity for Indian manufacturers.

IT stocks are a tactical buy. Vakil acknowledges that the longer-term business model of large IT companies is under pressure as the industry shifts from time-based contracts to outcome-based contracts driven by artificial intelligence. However, the valuation correction has been so sharp that he sees a 15 to 20 percent bounce possible over the next three to six months. For institutional investors, he recommends moving from underweight to equal weight on IT.

For longer-term investors, he sees the real opportunity in nimble midcap and smallcap IT companies that can implement and configure AI solutions for enterprise clients.

Cables and Wires round out his recommendations, riding the same power and infrastructure wave with strong earnings momentum already visible.

What investors need right now

Vakil distilled the current market moment into four requirements for investors: cash to deploy, strong ideas, conviction in the long-term India growth story, and the courage to act when uncertainty feels highest.

"Those investors who will deploy capital in such uncertain times will eventually reap the benefits," he said.

The message is clear. The correction has done its work. The sectors are identifiable. The only question left is whether investors are willing to act.