Alpha Capital’s Mukesh Jindal advises investors to shift toward defensive sectors like banking and telecom amidst rising market volatility. He suggests prioritizing companies with strong deposit bases and cash flow stability while highlighting risks in IT services due to AI-driven pricing shifts.
With market volatility rising due to geopolitical tensions and surging crude oil prices, wealth managers are urging a shift in strategy. Mukesh Jindal, Senior Partner at Alpha Capital, has advised investors to move away from speculative bets and focus on defensive sectors such as banking and telecommunications to protect portfolios from potential downside.
The Shift Toward Banking Stability
Banking remains a key focus, but with a specific filter. While the broader banking sector is currently showing strong asset quality—with gross non-performing assets at historically low levels—Jindal suggests that investors should be selective. The primary monitorable for lenders is not just credit growth, but the strength of their deposit franchises. As credit expansion has outpaced deposit mobilization across the system, banks are facing higher liquidity costs. Investors are advised to prioritize institutions that can secure low-cost deposits, as these lenders will be better positioned to manage margins if interest rate environments remain challenging.
Telecom as a Cash-Flow Anchor
The narrative for the telecommunications sector has undergone a significant change. Previously, the industry was focused almost entirely on capturing market share through subscriber growth. Now, the focus has shifted toward monetization and maximizing revenue from existing users. This evolution has transformed telecom operators into more reliable generators of cash flow. In a market where growth visibility is becoming harder to find, this stability makes telecom a defensive anchor for long-term investors.
Challenges in IT and Macro Outlook
While banking and telecom offer defensive support, other sectors are facing structural headwinds. The Information Technology sector, in particular, is navigating a fundamental change in client behavior driven by artificial intelligence. As AI enables greater efficiency, clients are moving away from traditional headcount-based contracts. Because these new models require fewer personnel to complete the same amount of work, large-cap IT firms are seeing pressure on their legacy billing models. This creates a difficult environment for growth until the sector successfully transitions to outcome-based pricing.
Beyond specific sectors, the overall market environment remains sensitive to external factors. While market consensus has often targeted earnings growth in the range of 15-17 percent for the fiscal year, Alpha Capital suggests a more cautious approach. A target of 12-14 percent is considered more pragmatic given current global instability. Investors should also monitor crude oil prices closely; if prices sustain above $100 per barrel, it puts direct pressure on retail inflation and limits the Reserve Bank of India’s ability to provide monetary support to the economy.