He said this presents a plethora of opportunities across the market cap spectrum.
Mehta continues to prefer financials, especially capital market-linked plays, select PSU banks and NBFCs.He sees strong structural growth in India’s financialisation theme. With rising demat accounts, growing retail participation and increasing shift from physical savings to financial assets, capital market infrastructure companies such as exchanges, depositories, wealth managers and select brokers remain long-term beneficiaries.
Mehta added, “Probably don’t hold for the next three months. But if somebody has horizon for the next two, three years, this look very interesting.”
Among banks, he believes PSU banks have cleaned up their balance sheets and are now better positioned. He pointed to improving credit growth trends, citing commentary from State Bank of India as an example of strengthening loan momentum.Valuations for PSU banks remain lower compared to private peers, but this time, he believes fundamentals also support the case. If private capex revives and government infrastructure spending continues, a new lending cycle could emerge — benefiting both PSU and select private banks.
Beyond financials, Mehta remains constructive on capital goods, manufacturing and engineering companies.
Government spending on railways, defence, roads and infrastructure, along with potential revival in private capex, could support earnings growth in these sectors. He also highlighted opportunities in semiconductor manufacturing, cloud storage and engineering-led “new age” businesses — particularly in the mid- and small-cap space.
However, he cautions that investors must be ready to handle volatility in these segments.
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