Nikhil Kamath reveals his 3 top investment theme as Middle East tensions shake markets, ‘Looks cheap today, but…’

As geopolitical tensions in the Middle East reshape global energy markets, Zerodha co-founder Nikhil Kamath clarifies how it is impacting the investment opportunities. He explains, energy transition theme gaining fresh momentum, with electric vehicles and batteries to power transmission networks, providing long-term opportunities. He also identifyies beaten-down Indian IT stocks as attractive contrarian bets.

Kamath, during a Bloomberg Television interview, said, “Energy transition has become a key investment theme, cuurently. Electric vehicle and battery makers, transmission companies and grids have become potent ideas to follow.”

Information technology sector, among the worst performers in India’s $5 trillion equity market, is one of Kamath’s contrarian bets. “Some really well-run IT services companies in India are cheap today and they look attractive.”

Kamath is hopeful that Indian stock markets is likely to revive soon. The falling global oil prices and a weaker rupee could support the stock market, especially as many Indian stocks have become cheaper after lagging for a long time, he said

Indian equities have underperformed most Asian markets this year due to the Middle East conflict, heavy foreign investor selling, high commodity prices and slower earnings growth. Foreign investors have pulled out a record $29 billion from Indian stocks this year, although they have recently started buying again after measures were introduced to support the rupee.

“Foreign funds don’t have track record of timing Indian markets well,” Kamath said. They often exit when valuations are cheap and return when stocks are expensive. “I hope, in a way, history repeats itself.”

Last week, the benchmark indices rallied in four trading sessions out of five. In the previous trading session also, the benchmarks registered gains. However, stock market benchmark indices Sensex and Nifty faced heavy selling pressure on Tuesday, dropping over 1 per cent, tracking a bearish trend in global markets along with weakness in HDFC Bank and IT firms.

Fresh foreign fund outflows also led to the weak trading in equities.

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