The IT sector is poised for a revival in 2026
Subramaniam expects near-term earnings to benefit from the rupee’s depreciation of nearly 7%, which should boost rupee-denominated revenues for export-heavy IT companies. He added that the sector is undergoing a structural reset, with companies aggressively investing in artificial intelligence.
“You see IT players acquiring AI companies or investing heavily in AI capabilities. At the same time, they are cutting back on middle management that is not ready for AI and hiring new talent with AI skills,” he said. According to Subramaniam, AI consulting is likely to become a key growth driver for the sector in the coming year.
From the perspective of global flows, he believes that IT could once again attract foreign institutional investors. “With US interest rate cuts expected, financial institutions may prefer IT as it provides a natural currency hedge. If the rupee weakens, IT revenues will offset this,” he noted, calling the sector a potential “dark horse” for 2026.
Real estate could be a strong counterplay
Besides IT, Subramaniam is constructive on real estate, a sector that significantly underperformed in 2025 despite strong fundamentals. He explained that while home sales declined, property values continued to rise, driven by demand for premium and luxury homes.
“In 2026 we should finally see VAT and interest rate cuts reflected in property shares,” he said. He expects developers will increasingly focus on affordable housing, helped by lower financing costs and lower VAT on building materials. Land acquisition on the city fringe and small-scale projects could boost volumes in the next phase. Another major tailwind for real estate is the expansion of Global Capability Centers (GCCs) in India, driven in part by uncertainties in global trade and visa-related issues abroad. “The growth of the GCC is a direct result of corporate real estate and will strengthen the demand for office space,” said Subramaniam.
REITs and ease of financing to support developers
Subramaniam also highlighted the improving financing environment for real estate developers. As REITs move to equity status, more mutual funds are expected to increase allocations to REITs. “We could even see a dedicated REIT theme fund launched, offering equity tax with stable income,” he said. He believes this will significantly improve access to finance for developers and support sectoral revaluation.
The pharmaceutical theme is still led by GLP-1
On the pharmaceutical sector, Subramaniam said GLP-1 drugs will remain the dominant growth theme in 2026. “We are the obesity capital of the world. Domestic demand for GLP-1 molecules themselves will be huge. It’s a transformational story and will continue to drive pharmaceutical industry valuations,” he said, adding that investors don’t have to look much further than this trend to drive near-term growth.
The focus of investments shifts to facilitating the private sector
On infrastructure and capital expenditure, Subramaniam expects the government to subtly change its strategy. Instead of just boosting public capital investment, the focus can shift to enabling private sector investment through public-private partnerships, PLI adjustments and asset monetization.
“The government will aim to maintain stable investment, but shift more money to consumption and put cash in the hands of the middle class,” he said. Roads, logistics and other PPP-led infrastructure segments could see greater private participation as a result.
Outlook for 2026
Overall, Subramaniam believes 2026 could reward investors willing to make selective contrarian bets. “IT, real estate and certain capex-related themes have underperformed, but the building blocks for a recovery are falling into place,” he said, adding that disciplined sector rotation and patience will be key to generating alpha in the year ahead.
#dark #horse #real #estate #pharmaceuticals #capex #focus #Sunil #Subramaniam