Largecaps over midcaps, banks over PSUs: V Srivatsa reveals where smart money is heading

V Srivatsa of UTI AMC favors largecaps over midcaps and private sector banks over PSU banks, citing a steep 30-40% midcap premium over largecaps and the narrowest PSU-to-private bank valuation gap in years. Falling crude oil should improve macro indicators in the second half of FY26, though near-term earnings downgrades of 2-3% are likely before the recovery. He also holds a contrarian bullish stance on largecap IT names trading at 12-14x earnings with a 5-6% dividend yield, and expects FII flows to rotate back to India once the global AI trade peaks.