Markets set for recovery? Siddharth Vora bets on largecaps, midcaps; flags metals, PSU banks, and cyclicals

India's equity markets are flashing a rare contrarian signal, and one fund manager is already positioned to capitalise. Siddharth Vora, Head of Quantitative Investment Strategies at PL Asset Management, says the confluence of macro stability, bottoming earnings, and multi-decadal underperformance versus global peers makes the current setup "very constructive" for Indian equities — particularly in largecaps, midcaps, metals, PSU banks, and cyclicals.

India's underperformance is at a historic low — and that's actually good news

Vora pointed out that India's relative underperformance versus emerging markets, developed markets, and precious metals has hit the bottom 10 percentile on a multi-decadal basis. In market terms, that is the kind of extreme reading that tends to precede mean reversion and outperformance.

"Given the growth, the valuation, the strong domestic liquidity, and the favourable macro policy in India, I do not think India has a reason to underperform so much," Vora said in an interview with ET Now.


Several tailwinds are converging at once — earnings appear to be bottoming out after six weak quarters, crude oil prices remain supportive, and India has diversified its trade relationships significantly. The EU Free Trade Agreement, in particular, was flagged as a "really good long-term structural win" for the country.

Where the fund is putting its money

Rather than chasing AI-linked technology names, PL Asset Management's flexicap fund has built a distinctly cyclical, value-oriented portfolio. The strategy has delivered 6–8% alpha across the 3-month, 6-month, 9-month, and 12-month periods — even as broader Indian markets underperformed globally.

The fund's key overweights include metals and materials, PSU banks, auto ancillaries, industrials, defence, and energy and power stocks. FMCG and IT remain deliberate underweights, and that call has been a meaningful source of alpha.

On PSU banks specifically, Vora outlined a compelling "triple delta" thesis — valuation re-rating, stronger earnings growth relative to private banks, and improving return on equity. "Every time the multiple rerates even from 0.6 to 1, you get a massive return," he noted.

The smallcap caution signal

While sentiment around smallcaps has been recovering, Vora remains disciplined. The fund has kept smallcap allocation to just 10–15% over the past year, citing mixed earnings delivery and stretched valuations. Largecaps and midcaps, by contrast, offer better earnings quality and valuation comfort at this stage of the cycle.

On IT and AI: Tactical trade, not a long-term bet

Vora's take on Indian IT is perhaps the most striking part of his market view. While acknowledging that sharp corrections make IT stocks tactically interesting in the near term, he is deeply cautious about the decade-long picture for traditional IT services companies. Labour-arbitrage models, he argues, will not survive the AI transition intact.

"Taking a 10-year view on Indian IT services at this point is very difficult," he said. Platform and product companies may hold up better, but traditional services businesses will need to innovate, retrain staff, and operate with leaner teams.

Instead of direct AI plays, the fund is positioned as a "third-order beneficiary" of the global AI transition — through metals, energy, and power, all of which feed the infrastructure demands of an AI-driven world.

The quant framework behind the calls

PL Asset Management's portfolio construction relies on a quantitative model that evaluates securities across five to ten factors — value, quality, growth, and momentum being central. A sector needs multiple factors working simultaneously to make the cut. FMCG, for instance, scores well on quality but fails on valuation, momentum, and the rate of quality improvement — so it stays out.

It is a disciplined, factor-driven approach that has largely avoided the market's underperforming pockets while staying concentrated in areas where the fundamental and technical picture is improving together.