FY26 won’t be easy: Equentis Wealth’s Manish Goel on how investors should play the long game

Many investors are wondering if the current market correction presents a buying opportunity, which sectors are best positioned for recovery, and how to protect their investments from the growing impact of U.S. trade restrictions.

In a conversation with Business Today, Manish Goel, Founder and Managing Director of Equentis Wealth Advisory Services, shared his views on current market conditions, sectoral trends, and investment strategies for FY26 amid global uncertainty. Edited excerpts

Q) Is the current market correction a buying opportunity or is there further downside due to global uncertainty?

The recent correction in Indian equities offers a selective buying opportunity rather than a broad-based entry point. While global concerns like U.S. protectionism, tighter financial conditions, and geopolitical tensions have weighed on market sentiment, India’s domestic fundamentals remain resilient. With GDP growth expected between 6.5%–6.7%, inflation stabilizing near the RBI’s 4% target, forex reserves at $676 billion (as of April 2025), and corporate earnings projected to grow by 13–14%, the medium-term outlook stays constructive. Though short-term market movement may remain range-bound due to policy uncertainty and weak global cues, this is a good time to accumulate quality stocks, especially in sectors with policy support and structural strength. Any progress in U.S.-India trade discussions could act as a positive trigger.

Q) Which sectors are likely to dominate in case of a market recovery?

Recovery is likely to be led by domestically focused and capex-driven sectors. The government’s Rs 15.5 trillion capex outlay for FY26 is expected to support infrastructure and capital goods, with momentum in roads, metros, and railways offering strong earnings visibility.

Private Financials, particularly well-capitalized banks, remain compelling due to robust credit growth, asset quality (NPAs

The PSU space is gaining investor interest, especially in defence and logistics, driven by PLI schemes and increased budgetary allocations. On the consumption side, a rebound in urban incomes and festival-related demand could lift discretionary segments like automobiles and premium retail.

Q) Do you see sectoral rotation happening, and if yes, which sectors may lose out?

Yes, sectoral rotation is underway, influenced by shifting macro trends and investor preferences. Export-oriented sectors such as IT, pharma, and chemicals are under pressure due to sluggish global demand and trade disruptions. IT revenue growth is expected to slow to 5–7% in FY25–26, down from previous cycles.

Even consumer staples, usually considered defensives, may face challenges due to weak rural demand and slow volume growth. Premium real estate may also lose steam amid high borrowing costs. In contrast, efficient industrials, select private banks, and government-backed sectors like defence and infrastructure are attracting greater investor attention.

Q) How should Indian investors hedge or position their portfolios in light of increasing U.S. protectionism?

Investors should adopt a strategy centred on resilience and diversification. Reducing exposure to export-reliant sectors such as auto ancillaries and textiles while increasing allocations to domestic themes like infrastructure, defence, and financials can provide stability.

Hedging tools like gold ETFs and selected international fund exposure can help cushion portfolios from currency and global shocks. Investors should prioritize companies with pricing power, low debt, and largely domestic revenue sources—shifting from “growth-at-any-cost” to a more insulated growth approach.

Q)  Is the banking sector still a safe bet? How will any rate cut affect the sector in FY26?

Private sector banks remain a solid investment, supported by robust credit growth, improved asset quality, and strong capital buffers. Currently, large private banks are trading below their historical valuation averages, making them attractive from a risk-reward perspective.

The RBI’s recent 25 bps rate cut to 6% signals an accommodative stance to support economic growth amid global trade tensions. Rate cuts later in FY26 could lead to compression in net interest margins, offset by stronger loan growth, increased fee-based income, and operational efficiencies. Banks with diversified funding sources and digital advantages will likely outperform.

Q) What is your outlook on the PSU theme?

The PSU theme has shifted from a tactical bet to a more strategic opportunity. Sectors like defence, logistics, and power transmission are reaping benefits from government initiatives and improving financials.

Valuations remain attractive, with many PSUs offering dividend yields over 4–5%. However, selectivity is crucial. Focus should be on companies with good governance, sustainable return ratios above 13–14%, and consistent earnings visibility.

Q) Could Trump’s new tariffs make global investors more cautious, and what impact could that have on foreign money coming into Indian stocks?

Trade protectionism often sparks volatility and reallocation. During the 2018–19 U.S.-China trade war, EM equities saw $35 billion in outflows, including nearly $6 billion from India. In 2025, India has already experienced approx. $3.9 billion in FPI outflows, driven by global caution and rising U.S. yields.

However, India’s strong GDP growth, macro stability, and increasing global index weight make it hard to overlook. Long-term FPI flows are expected to remain positive, especially in sectors like electronics, defence, and semiconductors.

Q) What should be the right strategy for equity investors to survive FY26 amid this volatility?

FY26 is expected to bring moderate returns with higher volatility, requiring a balanced and agile approach. A barbell strategy—mixing high-growth cyclical sectors like infrastructure and financials with defensives such as healthcare and consumer staples—can help manage risk.

Maintaining a 10% cash buffer provides flexibility during corrections. Staggered investments help reduce timing risk. Focus should remain on fundamentally sound companies with stable earnings and low leverage. Long-term alignment with India’s structural growth trends, coupled with risk management, will be crucial for navigating FY26 effectively.