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Synopsis: Manish Goel, MD of Equentis Wealth, believes FY26 will test investor patience, and advises a long-term, sector-focused investment strategy amid global trade tensions and market volatility.
In an insightful conversation with Business Today, Manish Goel, the Founder and Managing Director of Equentis Wealth Advisory Services, shed light on how Indian investors should navigate the challenging landscape of FY26. With global trade protectionism on the rise and uncertainties clouding financial markets, Goel believes that resilience, diversification, and sector selectivity will be crucial in the year ahead.
Goel stated that while the recent correction in Indian equities may look alarming on the surface, it presents a selective buying opportunity rather than a broad-based market entry. Despite pressures from global financial tightening and geopolitical risks, India's macro fundamentals remain solid. GDP growth is projected between 6.5% and 6.7%, inflation has stabilized around the Reserve Bank of India's 4% target, and foreign exchange reserves stand strong at $676 billion (as of April 2025). Corporate earnings are also expected to grow in the range of 13–14%. Though near-term market movements may remain range-bound due to policy-related uncertainties and weak global cues, Goel recommends accumulating fundamentally strong stocks—particularly in sectors that benefit from government policies and exhibit structural strength.
Looking ahead, he believes the market recovery will be led by domestically oriented and capital-expenditure-driven sectors. With the government announcing a substantial Rs 15.5 trillion capex plan for FY26, sectors like infrastructure and capital goods are set to gain, particularly in roads, metros, and railways. Private sector financial institutions, especially those with solid balance sheets, also appear promising due to strong credit growth and improved asset quality. The PSU segment is becoming more than just a tactical play, especially in defence and logistics, backed by Production Linked Incentive (PLI) schemes and increased budget allocations. Additionally, a rebound in urban incomes and festive season demand is expected to benefit discretionary consumption, including automobiles and premium retail.
However, Goel cautions that sectoral rotation is underway. Export-dependent industries like IT, pharmaceuticals, and chemicals may struggle in FY26 due to weak global demand and disruptions in global trade. IT revenue growth, for instance, is projected to slow down to 5–7%, a noticeable drop from previous cycles. Even typically defensive sectors such as consumer staples may face headwinds due to tepid rural demand and sluggish volume growth. High borrowing costs could also dampen the momentum in premium real estate. Conversely, industrial companies with efficient operations, well-capitalized private banks, and sectors supported by government initiatives are expected to draw more investor interest.
In response to rising U.S. protectionism, Goel recommends a portfolio strategy based on resilience and risk mitigation. Reducing dependency on export-heavy sectors like auto ancillaries and textiles, and instead focusing on domestic growth stories in infrastructure, defence, and financial services, could offer more stability. Additionally, hedging through gold ETFs and selective international fund allocations can protect against currency fluctuations and global shocks. Investors are encouraged to prioritize companies with strong pricing power, low debt, and a primarily domestic revenue base, shifting from the “growth-at-any-cost” mindset to one that emphasizes quality and sustainability.
When asked about the banking sector, Goel expressed continued confidence, especially in private banks. Despite the RBI’s recent 25 basis point rate cut to 6%, which signals an accommodative stance, the sector is expected to remain strong. While future rate cuts may compress net interest margins, the negative impact is likely to be offset by rising loan growth, fee-based income, and operational efficiency. Banks that are digitally agile and have diverse funding sources are expected to outperform.
On the PSU front, Goel noted a major shift in perception—from short-term opportunistic trades to long-term strategic plays. Sectors like defence, logistics, and power transmission are not only benefiting from robust government support but also showing improved financial health. Valuations are still attractive, with several PSUs offering dividend yields above 4–5%. However, Goel stresses the importance of selective investment—focusing on companies with solid governance, sustainable return ratios over 13–14%, and clear earnings visibility.
Finally, addressing the global outlook, Goel warned that if the U.S. introduces new tariffs under Donald Trump’s policy framework, global investors may become more cautious. Historical patterns, such as the $35 billion in outflows from emerging markets during the 2018–19 U.S.–China trade war (including nearly $6 billion from India), suggest that protectionism could trigger significant volatility. In 2025, India has already seen foreign portfolio outflows of approximately $3.9 billion, largely due to cautious sentiment and higher U.S. yields.
Goel’s overarching message is clear: FY26 will not be smooth sailing. Investors should take a measured, long-term approach—focused on strong domestic sectors, robust company fundamentals, and protection against global economic headwinds.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should consult certified financial advisors before making any investment decisions.
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