'Equities poised for comeback in 2026 as growth improves'

Banking, financial services and insurance (BFSI) stocks stand out currently with strong fundamentals and attractive valuations, says Ramesh Mantri, chief investment officer, WhiteOak Capital AMC.

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In an interview with Abhishek Kumar in Mumbai, he adds that the outlook is also positive for the pharmaceutical and healthcare sector. Edited excerpts:

As the new year begins, how do you assess the equity market, and what are the key factors you will be watching closely?

It is difficult to predict near-term market movements. However, based on current trends, the equity market appears poised for a comeback in 2026.

Markets have largely remained range-bound since September 2024, indicating a time correction. At the same time, growth is showing early signs of improvement. Industrial activity has picked up, as reflected in strong November industrial production data, while inflation remains benign.

Lower inflation combined with improving growth is supportive for equities. Even the September quarter, which was expected to be weak due to tariff-related concerns and delayed GST benefits, turned out better than anticipated. Our asset allocation model had reduced equity exposure to its lowest level in the past two-and-a-half years around September 2024. Currently, it is around 10 per cent overweight on equities.

How important is the India-US trade deal as a trigger?

The deal should have been concluded by now, but it has been delayed. Beyond a point, it does not matter whether it happens in a few weeks or a couple of months, as long as the outcome is reasonable.