Quant MF’s Sandeep Tandon says this is India’s biggest buying opportunity since covid

In the Mint Money Guru series, Quant Mutual Fund founder and chief investment officer Sandeep Tandon explains why he believes this is the biggest buying opportunity since the covid pandemic.

Edited excerpts:

What was the rationale behind your recent call on India being the biggest buying opportunity since the pandemic?

It's largely a behaviour call coming from some analytics that we have built. The element of fear is very high. People are worried about crude prices, the rupee and the exit of foreign institutional investors (FIIs). Plus, India has underperformed for several quarters. If I look at the culmination of that, we have reached an inflection point endorsing that the worst is behind us, but the best is yet to begin.

We believe crude spot prices have peaked out, which means they have the potential to correct and consolidate now. Maybe by the end of the year, you will see a similar price to what we saw in February. That itself is a very big call. Everyone can do a post-mortem analysis but you can only take advantage if you can predict something right.

April was beyond our own expectations. When sensible people capitulate, that is the time it bottoms out. Today, Taiwan and Korea are doing very well, no doubt about it, but if I was not able to build my position earlier, I will avoid it during the euphoric phase.

Bernstein wrote an open letter to the PM citing various challenges with India's economy. What did you make of it?

Everybody has their own perspective. My only point is that we are not seeing capitulation at this point in time. People say the rupee is hitting a new low against the dollar, I say this is the most it can fall. There is a big difference. While it is difficult to find the exact top, I will look for an opportunity when it reaches its peak, not when the depreciation is expected to continue.

There's no denying we missed out on artificial intelligence (AI) move, but it is not necessary that every innovator is a leader. We are a big adopter of AI, which is equally important. Technology actually brings efficiency, improves productivity, cuts down your cost and minimizes error, but there's no certainty that accuracy is there, which is a big challenge we see.

The small-cap index recently hit a high and there were a lot of headlines about overvaluation one or two years ago. What was your strategy?

We were also very cautious. I think valuations are relatively better, but in absolute terms we are still expensive. People tend to quantify only earnings, not price-to-earnings multiples.

We are seeing that risk appetite has collapsed completely. Today, if you talk to most money managers, they are suddenly talking only about large caps, but we are looking at micro and smallcaps that we believe will do better than largecaps. This is one of the lifetime high liquidity levels in India. So when you see a situation where liquidity is high and risk appetite collapses completely, that's the time you have to go all in.

We underperformed in 2025 because while the diagnosis was perfect, maybe stock selection was not happening. But in the last few quarters, we have come back in a big way where our ranking has improved significantly.

This time we saw mutual fund inflows were intact even when the markets fell. What does it tell you about investor behaviour?

We have been talking about how retail investors have become more mature. There is a big behavioural change we have seen post-covid. Earlier, we used to say retail investor participation is the highest when the market tends to peak out. But this time it has changed because they are leaders of this bull run that started in April 2020.

Second, the amount of money people made over those four years is extraordinary, so even a 15-20% hit does not impact them. Now you have understood the importance of long-term investing. Earlier, investment was whenever you had surplus money you put it in the market or through mutual funds. Now SIP has become a need and that is a very important change as that's the reason we are able to absorb a very large amount of outflow.

You were among the first asset management companies (AMCs) to launch Specialized Investment Funds (SIF). How is that segment getting traction?

This is one of the best products the Securities and Exchange Board of India has actually approved because you are getting a huge tax benefit for a long-short product. The real outcome is that you are able to manage the beta of the portfolio in a better manner.

In a mutual fund you can also do hedging but here you can short a sector or stock that you think will generate negative returns over a period. Today, everybody thinks only from a long perspective. The moment you start thinking from a short perspective, that opportunity or thought process is completely missing.

A lot of people ask this question: whether I sell mutual funds and then I do SIF. I always say it should be 50-50. It generates superior risk-adjusted numbers as a combination.

Would you say that an ex-top 100 equity long-short is riskier because of the liquidity that starts drying up beyond 100 stocks?

This problem will come when this segment becomes very large. But if our corpus grows, market size is also increasing, while the depth and breadth of the Indian capital market are improving.

On a relative basis to equity long short versus ex-100, obviously liquidity will be on the lower side. Somebody who is very conservative should not come into that category. They may go for hybrid or the active asset allocator category, where we have flexibility on the asset side itself.

So if I am bullish on, let's say, commodities, we can have a very large exposure, up to 90% exposure where in a mutual fund, you still have a 10% restriction.

What other contra calls have you taken, asset-wise?

A big call that we have taken this year is that it is all about segments that are either undervalued or under-researched and avoiding those that are over-owned. So far, we have only seen FII over-ownership. The next big crisis for us is domestic over-ownership because domestic money flow was very meaningful in the last few years.

We also have to avoid segments where domestic institutions, including mutual funds, hold very high exposure. A consensus candidate or a common stock in the portfolio has the biggest risk. We are looking at some of the stocks people are not willing to touch.

What would be your advice to Indian investors?

India is a structural story even as the last two years have been very challenging due to trade-related or crude-related uncertainty. We are evolving as a country. Maybe by 2030-32, our dependence on fossil fuels also comes down.

We have overcome every crisis in the past and learnt important lessons. Plus, the demography is in your favour and domestic consumption is meaningful. Hence we have a very constructive outlook. People have to remain invested but understand that everything is not long term.

Find a money manager to identify short- and medium-term opportunities. In a very changing world, you can’t have a static style of money management, that era is over. It is not a time to invest in stocks for 10 years or 20 years as even the best blue-chip stocks of the 90s don’t exist today.