February 6, 2026
The focus of the Indian stock market has shifted to long-term growth opportunities. Recently, three key developments have strengthened the prospects for Indian companies.
First, the India-EU Free Trade Agreement has been finalized, improving access for Indian exporters to European markets.
Secondly, the Union Budget 2026 strengthened the government’s focus on capital expenditure, production and consumption-led growth.
Third, trade relations between India and the US have improved, with tariffs on several Indian goods reduced from 50% to 18%, providing relief to exporters and improving competitiveness.
With these macro factors already in place, investors in 2026 will focus less on short-term market movements and more on stocks to buy in 2026 for long-term growth.
We looked at companies that combine strong fundamentals with reasonable valuations.
To identify fundamentally strong companies, we applied the following filters…
Stock filters
| Criteria | Filter applied | Rode |
|---|---|---|
| Price/Earnings (PE) | Lower than the sector average | Avoid overvalued stocks |
| PEG ratio | Below 1 | Growth at a reasonable price |
| Sales growth (5 years) | Above 30% | Strong sales growth |
| Earnings growth (5 years) | Above 30% | Consistent profit growth |
| Return on Capital Employed (ROCE) | Above 20% | Efficient use of capital |
| Debt/equity ratio | Below 1 | Healthy balance |
| Market capitalization | Above Rs 40 billion | Business scale and liquidity |
In this editorial, we focus on five stocks to watch in 2026.
Would you like to read the full article?
Enter your email address to continue reading on Equitymaster.
Important: We hate spam as much as you do. View our privacy policy and terms of use.
By entering your email address you will also sign up for Profit Hunter, a daily newsletter from Equitymaster on exciting investment ideas and opportunities in India.
#stocks #watch