Outlining his global macro view, Tandon stated a gradual rise in interest rates, citing the Bank of Japan’s recent hike and projecting further increases. He warned that the era of extraordinary global liquidity has peaked or is in its final stages. “The hype, extraordinary hype which was getting built globally on new-age companies… that will get adjusted,” he said, expressing concern for stocks that saw maximum rerating without corresponding earnings. In this complex environment, Tandon anticipates that the roles of central banks will diminish over the next five to seven years and that both quantitative easing (QE) and quantitative tightening (QT) will coexist.
Despite the challenging global backdrop, Tandon holds a “relatively more constructive” view on India. He stated that Indian markets have relatively underperformed, the macroeconomic picture is reasonably good, and the country’s beta has declined, leading to a negative correlation with other major markets. “We are in a better position as compared to global equities,” he affirmed. He also suggested that the USD/INR currency pair is in the final stages of peaking out, referencing a successful call his firm made in 2018.
The core theme for 2026, according to Tandon, will be a “complete reversal” of the trade that dominated 2025. He advocates for a focus on “under-owned stocks, undervalued stocks and less hype stocks.” This strategy involves shifting capital away from new-age technology firms, which attracted significant flows, and into neglected sectors. He stressed the importance of liquidity, advising investors to stick to liquid stocks for a one-year perspective.
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Delving into specific sectoral bets, Tandon revealed an “extremely bullish” stance on the pharmaceutical sector, calling it a “no-brainer trade.” He sees immense potential in Indian generics, the Contract Development and Manufacturing Organisation (CDMO) space, and biologics, comparing the opportunity to the one seen in the IT sector 20 years ago. He confirmed that pharma is a “grossly overweight” sector in their portfolio.
Another key area of interest is the insurance space, which Tandon described as “slightly neglected.” He stated that while most analysts have given up on the sector, fundamentals are gradually improving, presenting a classic bottom-fishing opportunity. This contrarian approach was successfully deployed with IT stocks, which the fund bought into when sentiment was overwhelmingly negative, only to see it become a top-performing sector.
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Other areas he finds attractive include large-cap energy, infrastructure, and power companies. Within the banking, financial services and insurance (BFSI) space, he remains positive on select non-banking financial companies (NBFCs). He also sees selective opportunities in the fast-moving consumer goods (FMCG) sector, particularly in food processing companies benefiting from the goods and services tax (GST) implementation.
For the entire interview, watch the accompanying video
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