Market nears inflection point; select largecaps offer entry window: Pankaj Pandey

As volatility grips equity markets amid global uncertainty, investors are once again confronting a familiar dilemma: is it time to step in or stay cautious? According to Pankaj Pandey, Head Research, ICICIdirect.com, history may be offering a useful guide—and perhaps, a window of opportunity.

Speaking to ET Now, Pandey pointed to past geopolitical shocks as a benchmark for assessing the current correction.

“See, the only logical reference for today's market condition is the Russia-Ukraine war. At that point of time, we had seen a correction of about 11–12 odd percent, and we had seen at the lows about 10.5–11% kind of a correction. So, largely we are closer to the bottom if I go by that historical reference.”


The recent decline, he noted, has been broad-based. Key sectors such as auto and metals have corrected sharply, while the impact has been visible across market capitalisations.

“Sectorally, we have seen a correction of 15 to 17 odd percent in key sectors like, say for example, auto, metals, and across caps also we have seen about 10% to 11% kind of a correction.”

Despite lingering concerns around crude oil prices and geopolitical tensions, Pandey remains constructive on earnings resilience—an important factor underpinning his investment stance.

“Our sense is that while it is difficult to expect what kind of crude and the kind of duration it is going to remain at elevated levels, we have not seen historically much of a decline in earnings, and which is why I feel that this is a good time to buy at least largecaps.”

Stock Picks: Autos, Cement, and Capital Goods in Focus
Pandey highlighted a mix of sectoral leaders that have become attractive after the correction.

“Companies in the auto segment and others, say for example, L&T looks attractive to us. Besides that, Maruti and M&M look attractive to us. We have seen a good kind of a correction even in cement stocks, so UltraTech is looking attractive.”

Within defence, he singled out a relatively unconventional pick.

“If I have to call out one defence name, it will be Solar Industries because they have a decent amount of capability on the explosive side… on the loitering munition and other segments, this company can also play a role.”

HDFC Bank: Attractive Valuations, But Patience Needed
On the much-debated HDFC Bank, Pandey acknowledged compelling valuations but flagged near-term headwinds.

“HDFC Bank from a valuation price point is very attractive at somewhere about 1.4 times adjusted book on FY27 basis… But our sense is that this stock is unlikely to perform in the near to medium term given the challenges what it is facing now.”

He also pointed to persistent foreign investor selling pressure as a key overhang.

“It is witnessing the maximum brunt of FPI selling as well… we would not suggest chasing this stock at this point in time… this stock is going to relatively underperform its peers.”

Defence: Growth Intact, But Valuations Elevated
While bullish on the long-term prospects of defence, Pandey cautioned that valuations across the sector remain rich.

“The only challenge with most of these defence names… they are trading at rich multiples of somewhere about 45 to 60 times.”

Still, the structural growth story remains intact, supported by rising global and domestic defence spending.

“This is one of the few sectors where you could continue to expect a mid-teen or high-teen kind of a growth rate.”

“From a stable growth perspective Bharat Electronics is definitely on the top of the list… Besides that… Data Patterns… and Astra Microwave is another company which we would like.”

NBFC Space: Selective Approach Recommended
Turning to the lending space, Pandey refrained from commenting on Sammaan Capital but expressed optimism on select microfinance institutions.

“What we like within the NBFC lending space is again most of the MFI companies, especially CreditAccess Grameen. The worst of the issues are behind us.”

He expects a gradual recovery in growth momentum.

“Our sense is that the second half onwards the growth is going to come up to mid-teens and subsequently normalise over the next one or two years.”

Among PSU banks, select opportunities are emerging post-correction.

“We have seen a good amount of correction in PSU banks… BOB and other banks are looking attractive to us.”

A Market for Measured Optimism
The overarching message from Pandey is one of cautious optimism. While uncertainties persist—particularly around global conflicts and commodity prices—the market appears to be nearing a zone where long-term investors can begin accumulating quality names.

For now, the strategy seems clear: focus on largecaps, stay selective in financials, and look beyond conventional picks in sectors like defence where structural trends remain firmly in place.