Where valuations still make sense: ICICI Pru's Vaibhav Dusad on IT, banks and select contrarian bets

ICICI Prudential AMC believes select areas of the market offer opportunities despite high valuations and inconsistent earnings. Vaibhav Dusad, Senior Fund Manager, explains why the technology sector and large private banks present attractive entry points. He also discusses how changing interest rates are impacting the financial sector and where contrarian investment strategies might be successful as different sectors rise and fall.

**Inside the Focused Equity Fund**

Dusad addressed how the fund's concentrated portfolio, holding roughly 30 stocks, aims to generate alpha and outperform benchmarks.

He explained that a concentrated strategy magnifies conviction and results. By focusing on a smaller number of holdings, the fund prioritizes high-conviction ideas, giving each a significant portfolio weight. While this approach carries increased risk due to larger position sizes, it also offers the potential for greater returns if the investment strategy proves correct. Typical stock weights range from 3% to 4%, potentially reaching up to 10%.

When adding a new stock to the portfolio, Dusad noted that the initial allocation is at least 2%. This can be increased to a maximum of 10%, depending on the fund's conviction in the idea and overall portfolio needs.

**IT Sector Strategy**

Regarding the IT sector, Dusad addressed how ICICI Pru's positioning has changed, especially given concerns about slow earnings growth and stock performance.

"We were underweight IT until mid-2025, after which we moved to an overweight stance," Dusad stated. This shift was motivated by a more than 10% relative underperformance.