Stocks to Buy | Liquidity Drives Churn: Deven Choksey on sectoral rotation

Deven Choksey in an interview to ET Now explained that the current market movement is driven by rotational preferences rather than sector-specific fundamentals. The RBI's liquidity infusion and rate moves have led to renewed momentum in banking stocks, while others lag. This momentum-based trading is expected to continue, with market valuations already discounting FY27 earnings. Choksey sees price corrections as buying opportunities, especially in metals, autos, and ancillaries.

Choksey remains cautious on oil and gas, especially companies like MGL. Despite good infrastructure and a growing consumer base, these businesses are highly sensitive to gas pricing and government policy, limiting their investment appeal. Though they benefit from widespread distribution networks, policy unpredictability keeps the sector unattractive from a valuation and risk perspective.

While many focus on Rapido’s entry into food delivery, Choksey says the bigger threat is JioMart. Backed by cash and offering services without platform fees, JioMart could disrupt the market and challenge the pricing power of Zomato, Swiggy, and Blinkit. These firms already trade at fancy valuations, which could be unsustainable if JioMart gains share rapidly.

Private insurers are outperforming LIC due to product innovation, tech adoption, and lower customer acquisition costs. Choksey believes the new income tax structure, leaving more disposable income, will help funnel savings into financial products like insurance. He is positive on SBI Life, HDFC Life, and Bajaj Life, citing their strong embedded value-to-EBITDA ratios and growth runway.

Though tariff concerns loom, Indian pharma firms like Sun Pharma, Cipla, and Dr. Reddy's are strengthening through complex generics, giving them pricing power. Companies like Divi’s and Laurus are also expanding in the API segment. With input costs easing, margins are improving. Choksey is confident in the long-term potential, expecting a re-rating once the tariff fog clears.