State Bank of India, the country's largest, state-run Punjab National Bank, Crompton Greaves and Alstom Projects are part of Helios' holdings, and fund manager Samir Arora said it could buy more.
"If you are playing the stability or policy or better government or reforms, then it has to be basically these two sectors," Arora, who manages nearly $200 million in Indian equities at the Singapore-based firm, said on Friday.
"This is where the maximum shortages are and where maximum policy decisions could be made," he told Reuters by telephone.
India has estimated it needs $500 billion over the five years to 2012 to upgrade its overwhelmed airports, potholed roads and inadequate utilities but has lagged behind in making critical reforms needed to do so.
Arora is enthused by the prospects for reforms after Indian voters gave the Congress-led government the most decisive mandate in two decades. The previous Congress government needed support from Left and communist parties, who blocked planned reforms.
The BSE Sensex surged 17 percent on Monday on expectations the Congress win would open the way for reforms such as raising the foreign investment limit in the insurance sector and opening up the pension system to foreign participation.
Arora said a slower-than-expected pace of reform was a risk to the rally, but Congress' efforts not to cede critical cabinet posts to coalition allies showed it was serious.
"It's extremely positive that the Congress is not trying to do things in the old ways," he said.
While expecting banks and infrastructure would do well, he was underweight stocks in the pharmaceutical, consumer and technology sectors.
"They (government) can't definitely change pharma's fortune, and mostly they can't change consumers fortune," Arora said, adding a stronger rupee was a threat to export-driven technology companies.
Economic growth in India is expected to slow to a seven-year low of about 6 percent in 2009/10 (April/March), down from an expected growth of less than 7 percent in 2008/09, and rates of 9 percent or more in the three previous years.
Source: Reuters