Quest Investment Shifts to IT, Telecom, Cement After Market Selloff

The sharp pullback in Indian equities has forced a recalibration at Quest Investment Managers, with the firm pivoting hard toward information technology, telecom, and cement names. Rakesh Vyas, the firm’s CIO, told CNBC-TV18 that the correction has exposed reasonable valuations in businesses with clear earnings trajectories over the next three to five years. It’s a classic contrarian move—selling high, buying the dip, but with a specific sectoral focus rather than a blanket market bet.

Within IT, the strategy has shifted from caution to aggressive accumulation in mid-tier services firms. Coforge remains a top holding, but Vyas revealed the fund has added Mphasis and Persistent Systems to the mix. They’ve simultaneously booked profits on power transmission and distribution equipment manufacturers, a sector that had rallied sharply before the broader market wobble.

Telecom is seeing a similar pivot, driven by the expectation that capital expenditure cycles are peaking. Quest is holding Bharti Airtel and has participated in the recent Jio offering. The logic is straightforward: as capex moderates, free cash flow generation should improve, and potential asset monetization could act as a secondary catalyst for valuation re-rating.

Cement, a sector that has underperformed for some time, is now viewed constructively despite persistent energy cost pressures. Vyas argues that strong demand and ongoing capacity expansions will support earnings in the coming quarters. The fund has also moved into City Union Bank, betting on improving net interest margins in a rising rate environment, and increased exposure to select pharma and specialty chemical stocks for export-driven tailwinds.

On the capital markets front, Quest has reduced exposure to asset management companies and initiated a position in the National Stock Exchange. The bet is on improving derivatives volumes driving earnings growth. In internet businesses, Eternal remains a high-conviction hold, while a new position in Swiggy suggests confidence that quick-commerce economics will stabilize as competition eases over the next four to six quarters.

Vyas noted that the broader correction is part of a global risk-off trend, fueled by higher bond yields, Fed uncertainty, and US midterm election jitters. Yet, he maintains that India’s earnings trajectory remains ahead of expectations. This belief underpins the launch of a new smallcap and midcap-focused strategy, aiming to capture sustainable growth in currently undervalued segments.