What is your outlook for the Indian stock market in 2026, given global interest rate cycles and domestic growth trends?
India enters 2026 on solid footing, with pro-growth policies, VAT adjustments and a gradually easing RBI supporting easier financial conditions. Corporate earnings remain resilient, supported by holiday demand, strong margins and an improving earnings/GDP ratio. Steady domestic SIP flows continue to anchor the market, while improved global risk appetite could revive FPI participation. Together, these create a credible path to new highs in 2026, although global volatility and certain valuation areas warrant caution. Indian markets have entered a time correction from September 2024 and we expect it to consolidate within a range of up to 18 to 24 months. Considering this, the second half of calendar year 2026 should see a rebound in markets, if not sooner, supported by resilient domestic fundamentals.
Which sectors do you think are ready to generate alpha in 2026?
In 2026, the financial services, industrials and domestic consumption themes appear best positioned for alpha, supported by strong credit demand, a widening investment cycle and resilient household spending. Automobiles also provide selective tailwinds through stable margins and sustained demand. However, at Samco MF, sectors are not included in the portfolio due to human judgment; our rules-based, technology-driven framework only allows them if they show sustained momentum and our models trigger a buying signal. This ensures we participate in the strongest sectoral trends of 2026, but strictly through a disciplined, evidence-based process, free from bias and discretion. Defense, capital markets, power, energy, autos, support autos, platforms and chemicals are some of the themes we think will do well.
How comfortable are you with appraisals? Do you see price target increases coming back in 2026 as there appears to be consensus on a return to earnings growth in the next two quarters?
Valuations remain at elevated levels, but with consensus earnings growth expected to recover over the next two quarters, conditions for gradual target price increases through 2026 appear constructive. The recent correction is the result of liquidity pressures resulting from extensive IPO fundraising, tightening market size and global macro uncertainty that has weakened risk appetite. These factors could still justify a 5-10% downtrend or a few months of consolidation as markets stabilize. That said, the underlying earnings trajectory remains positive, suggesting that any volatility should be viewed as healthy digestion and not a change in the medium-term trend.
Among major sectors, IT was the biggest loser in 2025. Do you see IT stocks making a comeback in the new year?
IT has had a tough 2025 as global technology spending remained low and decision cycles remained sluggish, but the 2026 setup looks more balanced. As global interest rate cuts take shape and corporate budgets stabilize, deal activity and discretionary IT spending may gradually improve. Margin recovery – aided by better capacity utilization and cost discipline – could also support profits. While a sharp recovery is unlikely, a steady, selective comeback of high-quality IT names is plausible as global conditions normalize.
From a valuation lens, which sectors do you think offer relative valuation comfort and reasonable earnings growth prospects?
From a valuation perspective, the financials stand out with reasonable multiples and stable visibility of credit growth, providing both comfort and earnings momentum. Certain industrial sectors also look attractive as order books remain healthy, while valuations are not ahead of fundamentals. Within consumption, cars offer a balanced mix of moderate valuations and improving margin prospects. Overall, sectors tied to domestic growth but still trading below their peak levels offer the best mix of valuation support and sustainable profits.
What lessons from the 2024-2025 period influence your current investment playbook?
The past year has further reinforced that momentum can temporarily stall as markets struggle to reach new highs and sector rotations turn abruptly, as evidenced throughout 2025. Still, these phases are historically the best time to gather emerging leaders before trends recover. Even when equities were uncertain, bullions were solidly moving and we were able to leverage that strength, confirming the need to remain consistent in style across asset classes. These lessons are now driving a more patient, disciplined approach, using consolidation as an opportunity to build a stronger long-term momentum portfolio.
How should one handle gold and silver at this stage? Given the macroeconomic backdrop and central bank purchases, is there reason for more upside potential? Can those who missed the rally buy now?
Gold and silver remain supported by strong central bank buying, geopolitical uncertainty and the prospect of lower real interest rates, keeping the medium-term uptrend intact despite near-term consolidation. For investors unsure how to position themselves after the recent rally, the Samco Multi Asset Allocation Fund offers a disciplined route: it dynamically shifts between equities, gold and arbitrage, and had proactively moved to around 60-70% gold during JFM (Q1) 2025, when equities corrected and bullion was on the rise. This makes it a well-balanced option for those looking for diversification without having to time individual assets.
As the creator of the Active Momentum category in the domestic MF industry, how is your current NFO, India’s first Momentum-based Samco Small Cap Fund, different from other offerings available in the market?
As the proud creators of the Active Momentum category in India’s 30-year-old mutual fund industry, our new SAMCO Small Cap Fund stands out as the country’s first momentum-based small-cap offering. Unlike existing funds based on Quality, Value, Growth or blended styles, this fund applies a pure, evidence-based momentum framework. The Nifty Smallcap250 Momentum Quality 100 Index has outperformed the Nifty Smallcap250 TRI at a CAGR of ~6% over the past 20 years – effectively tripling wealth – demonstrating the long-term benefit of this factor. With momentum indices having undergone a meaningful correction over the past year, the entry backdrop is much more attractive today. For investors with an investment horizon of more than 5 years, adding a momentum sleeve through the SAMCO Small Cap Fund provides a differentiated and proven approach to small cap investing.(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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