Sees policy continuity over big-bang moves in Union Budget 2026
Mumbai, 14th January 2026: According to smallcase managers, Indian equity markets are entering 2026 on a firmer footing after a year of consolidation, with improving valuations, realistic earnings expectations and strong domestic fundamentals shaping a more constructive outlook.
The three women smallcase managers Sonam Srivastava, Founder of Wright Research, Prachi Deuskar, Co-founder, Lotusdew Wealth and Investment Advisors, and Sneha Jain – Founder & CEO, WealthTrust Capital Services believes that while global events could be a source of uncertainty, India’s macro fundamentals remain strong.
The smallcase managers believes that the coming year is likely to reward earnings-led investing rather than momentum-driven trades. They project a strong consumption-led growth cycle in 2026, supported by moderate inflation, tax cuts, GST reductions, and interest-rate cuts that boost disposable incomes and ease borrowing conditions.
Commenting on the road ahead, Sonam Srivastava, smallcase Manager and Founder of Wright Research, said, “CY25 was a year of digestion rather than disappointment. After the strong post-COVID rally, Indian equities spent most of the year consolidating, with returns becoming narrower and more selective. As we move into CY26 which structurally is more constructive than CY25, valuations look far more reasonable today, earnings expectations are realistic rather than euphoric, and India enters the year with macro stability. We expect returns to be earnings-led in CY26 rather than multiple-led, which favours disciplined stock selection and factor-driven strategies.”
She added that mid-teens earnings growth for Nifty companies, combined with improving sector breadth, makes the medium-term risk–reward more attractive despite global uncertainties.
Sneha Jain, smallcase Manager, Founder & CEO, WealthTrust Capital Services said, “After the valuation reset in 2025, large caps, traditionally the premium P/B cohort, are now trading below SMIDs on a price-to-book basis — an inversion that signals subdued expectations despite superior balance-sheet strength, cash flows and governance. This provides valuation comfort and makes large caps relatively more attractive over the next 6–8 months, though allocations should remain aligned to overall asset allocation, with large caps serving as a stability anchor rather than a tactical overweight.”
Budget Expectations: Women managers expects continuity over Big-Bang Announcements
The managers say that Women investors and managers are not looking for headline-grabbing announcements, but for continuity. Fiscal discipline, sustained infrastructure spending, support for manufacturing and MSMEs, and clarity on long-term capital gains taxation matter more than short-term incentives. Any measures that deepen capital markets, improve retirement savings participation, or increase financial inclusion for women would be structurally positive.
They expect the upcoming Union Budget to focus on continuity and structural support rather than short-term stimuli. They say that policy stability will be more critical than headline-grabbing measures.
According to Prachi Deuskar, smallcase Manager and Co-founder, Lotusdew Wealth and Investment Advisors, “We anticipate the Union Budget will reinforce policy continuity around infrastructure, formalization, and fiscal prudence, alongside measures to deepen household financial participation. We also expect some support measures for the MSMEs, such as easier access to finance, credit guarantees, and incentives to boost productivity and market access. Structural incentives for manufacturing, long-term savings products, and policies that enhance ease of investing and compliance are likely to strengthen investor confidence and broaden market participation.”
She noted that measures improving ease of investing, access to credit and long-term savings participation would be particularly constructive for sustained wealth creation.
Sectors to watch in CY26: Quality, Capex and Selective Growth
Experts believe sector leadership in 2026 will remain selective, with quality and balance-sheet strength taking precedence over broad-based rallies. They added that that valuation dispersion across market segments is creating opportunities, particularly within large caps.
Sonam Srivastava highlighted that financials, capital goods and manufacturing-linked sectors remain central to the investment narrative. She highlights that well-capitalised private banks and select NBFCs continue to benefit from steady credit growth and stable asset quality. Industrials, capital goods and defence are supported by the multi-year capex cycle. Manufacturing-linked themes such as EMS, auto ancillaries and specialty chemicals are becoming more selective but attractive at corrected valuations. Technology services could offer incremental upside as global demand stabilises. Consumption recovery is likely to be gradual rather than sharp.
Sneha Jain bets more on Information Technology and Precious Metals. She notes that The earnings yield of CNX IT has inched below the US 10yr Bond yield. Markets are pricing Indian IT similar to a Bond expecting low to no growth. Any growth in Indian IT sector should lead to rerating. On other hand, the gold–silver ratio, which was the primary indicator behind our silver call, has reverted to its historical median, suggesting silver now looks fairly overvalued at current prices. At the current ratio, gold offers a higher implied 1-year forward return than silver, reflecting relatively better risk-reward at this juncture.
While, Prachi Deuskar believes that Capital goods, industrial and defence sectors stand to benefit from ongoing infrastructure capex and supply-chain shifts. She notes that select consumption segments and healthcare demonstrate resilient demand, while niche IT and technology service providers with differentiated offerings could outperform as digital adoption grows. While, FMCG sector is reporting signs of demand recovery and double-digit earnings growth, underpinned by improving core consumption trends.