News

IT Stocks To Watch: After a brief pause in momentum, Indian markets are showing renewed strength, supported by positive data across cash and derivatives segments.

In an exclusive conversation with Zee Business Managing Editor Anil Singhvi, Feroze Aziz, Joint CEO of Anand Rathi Wealth, shared his insights on the current market setup, sector outlook, and what investors should watch next.

Speaking on the overall market direction, Feroze Aziz said the data clearly indicates a positive undertone. “I haven’t seen such a high premium in futures in the last two to three years,” he noted, adding that this reflects a strong possibility of an upside breakout.

He highlighted that the November derivatives series is currently showing an 11–12 per cent forward premium, a rare sign that typically occurs when traders are aggressively buying call options.

“It means the market fears that it could move sharply higher,” Aziz explained.

The optimism extends to December as well, with the first weekly series showing an 11 per cent premium and a roll cost of about Rs 16.

“Both cash and derivatives markets are positive, so the gravity is upward,” he added.

According to Aziz, domestic institutional investors (DIIs) continue to provide strong support. “DIIs have purchased over Rs 6.6 lakh crore worth of equities this financial year, while FIIs have sold around Rs 1.5 lakh crore,” he said.

However, he believes foreign institutional selling is nearing an end. “I expect FII selling to stop soon, possibly turning positive in this financial year,” Aziz remarked.

On the earnings front, Aziz pointed out that the Nifty’s FY26 earnings estimates of 12 per cent growth remain intact.

“If Nifty’s earnings reach Rs 1,300, and the index level is around 26,000, the free-float P/E would be about 20, which is quite reasonable,” he said.

He further explained that while the weighted average P/E appears high at 38 due to the inclusion of non-profit-making companies, the free-float P/E of 20 provides a better valuation picture.

For smallcaps, Aziz said earnings growth of 17–18 per cent was recorded last year based on the current constituents of the NSE Smallcap 250 index.

“There’s a misconception that smallcaps didn’t deliver. But constantly, earnings have been strong,” he emphasised.

Addressing the recent rally in IT stocks, which have gained for three straight sessions, Aziz said the sector seems to have built a strong base.

“Many large IT names are still about 25 per cent below their 52-week highs. FIIs have sold heavily in IT due to global reasons, but once they return, they’ll buy aggressively,” he observed.

According to him, this phase of consolidation has transferred shares into “strong hands,” setting the stage for a sharp rebound when foreign inflows return. “When FIIs buy, they do it ruthlessly, and price movements tend to be sharper,” he added.

On where to invest next, Aziz suggested focusing on larger weights within indices. “When domestic liquidity drives the market, investors should prefer heavyweights,” he advised.

His top sectors for the next two to three years include Auto, Banking, and Consumption.

“These sectors can outperform the Nifty by 3–4 per cent annually over the next three years,” he said, describing the current phase as a structural bull run.

For small-cap investors, Aziz recommended focusing on the top 20–30 names of the NSE Smallcap index for better liquidity and price discovery.

Anubhav Maurya is a Senior Sub-Editor at Zee Business, focusing on the stock market, personal finance, corporate news, and related sectors.

He has previously worked wi