Ashwini Agarwal, Co-Founder and Portfolio Manager at Ashmore Investment, told CNBC-TV18 that in his view, IT stocks could find favour owing to the weakness in the rupee and their safe haven nature.

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He said, “We expect a little more tailwind from a weaker rupee and there is a safe haven status that has been accorded to IT services. So at the margin, there is a swing in favour of IT compared to where we were 3 months ago.”

His remarks come at a time when the rupee is about one percent away from an all-time low of 76.96 against the US dollar hit this month.

Weakness in the rupee boosts the profitability of exporters such as IT companies, which draw the lion's share of their revenue from markets such as the US and the UK.

Besides IT services, he also finds the telecom space a good bet from an investment perspective.

He said, “Unfortunately, on a sector basis, there is very little to call out. So IT services, Banking, financial services and insurance (BFSI) appears to be good place to be. Telecom, where a significant consolidation is taking place and we are starting to see average revenue per user (ARPU) increases come through could be another place to be, but essentially we are all looking for places to hide.”

IT majors will kick off the corporate earnings season next month.

IT stocks have given phenomenal returns in the past year, with the Nifty IT index rising 38.2 percent as against the benchmark Nifty50's return of 16.6 percent.

Speaking on the banking sector, he said the worst credit cost appears to be behind in his view. He said, “The credit cost, the worst of them are behind us and from here you will see an improvement in credit cost. In the short run, especially for the banks, rising rates if they were to materialize in India are short-term positive.”

“The key issue remains whether we get to see loans growth which is still 8-8.5 percent. One is hoping that loans growth accelerate, but that comes back to the question that how deep is going to be this slowdown globally; less so in India, how strong is going to be external demand drivers and will the material inflation, will the inflation in consumption basket hurt both demand and supply in India enough to crimp capex to a point that banks’ loan growth remains constrained and single-digit – that’s the only concern, otherwise, BFSI as a space especially the banks remain interesting and attractive,” said Agarwal.

The banking index has managed to gain 5.8 percent during this period.

Financial services (36.1 percent) and IT (17.7 percent) shares have the maximum weightage in the Nifty50 gauge.

The fund manager sees a bottom-up investment opportunity in individual stocks in the broader segment after the recent correction.

Bottom-up investing is a style of investing where the focus is on individual stocks and not the overall macroeconomic environment and market cycles. This approach is contrary to top-down investing, wherein emphasis is given to the overall macroeconomic picture a business is a part of.

Among other sectors, he believes that select FMCG stocks are approaching reasonable levels after a sharp correction.

Agarwal has stayed away from commodities due to their complex nature. He is not looking to buy metal stocks at the moment.

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(Edited by : Sandeep Singh)