'IT mid caps still offer good opportunities'

Summary: From trimming defence bets to backing IT and platform companies, Atul Bhole’s agile strategy is powering a sharp turnaround at Kotak Midcap Fund. In this candid chat, he shares how he’s navigating the current slowdown, spotting inflexion points and managing quality growth in a crowded mid-cap space. With nearly Rs 65,000 crore of net assets under his watch, Atul Bhole is no stranger to navigating market turns. Bringing over 18 years of experience in Indian equity markets, the fund manager at Kotak AMC helms the four-star-rated Kotak Aggressive Hybrid Fund and Kotak Midcap Fund. From trimming overheated sectors like defence to adding IT mid caps, chemicals and platform companies, Bhole has leaned on disciplined sector rotation while staying anchored to fundamentals. In this interview, he outlines his investing framework, the drivers behind his mid-cap fund’s strong turnaround and why spotting inflexion points is critical in today’s market. After a muted results season, Indian equities appear to be showing signs of fatigue. Do you think this is just a short-term breather, or could it be the start of a more sustained slowdown? You’re right. The slowdown is quite concerning. Last month, we saw GST (goods and services tax) collections grow by just 6.2 per cent, and most other high-frequency indicators, such as petrol and diesel sales or power consumption, are also slowing down. Obviously, this year we have seen the early arrival of the monsoon by almost one to one and a half months, and it has its implications. However, over the last six to eight months, policy actions have taken full effect. We have seen a significant comeback in government spending, both in revenue and capital expenditure. At the same time, the Reserve Bank of India (RBI) has cumulatively cut rates by almost 100 to 125 basis points. Additionally, the 100-basis-point cut in the CRR (cash reserve ratio), which was a surprise, has also occurred. We are seeing inflation cooling down, which will have a positive effect on purchasing power. The monsoon is going well. Hopefully, all these factors, combined with the possibility of a cut in petrol and diesel prices due to oil behaving well despite geopolitical uncertainties, will also help. And from next year, starting in January, the implementation of the Eighth Pay Commission can also provide a boost. Not to forget, we received a tax break of nearly Rs 1 lakh crore in this budget, which has already taken effect. While we are seeing a slowdown, which is quite concerning, with all these policy measures and some luck favouring us in terms of the monsoon and oil prices, I think we