EXCLUSIVE | Which sectors should investors focus on in 2026? Manoj Bahety of Carnelian Asset Management & Advisors EXPLAINS | Watch

Manoj Bahety Market Outlook: In an exclusive interview with ET Now Swadesh, Manoj Bahety, Founder and Fund Manager at Carnelian Asset Management & Advisors, shared insights on the upcoming market outlook. He also discussed where investors should focus their investments in 2026 and which segments are likely to generate better returns.

Bahety had highlighted improving domestic fundamentals as a key driver for optimism.

He cited strong credit growth, which hit a 19-month high of around 14.6 per cent year-on-year in recent data, as a key indicator of economic strength, and guidance from large banks like SBI for 15-16 per cent credit growth over the next two years.

Bahety expressed confidence in India's outlook and projected Nifty earnings growth of 15-16 per cent going forward and nominal GDP growth of around 10 per cent. He said, "Valuations are now much more attractive compared to a year ago, making the current risk-reward favourable for long-term (2-3 year) investors."

He anticipated 2026 to be stronger than 2025 for the market and FII flows, given robust budget measures focused on manufacturing revival and improving fundamentals that are hard to ignore.

On foreign institutional investors (FIIs), who have remained net sellers in recent periods, Bahety said, "Outflows are due to temporary shifts toward developed markets amid global uncertainty and higher valuations earlier. However, with India's ownership levels low and fundamentals strengthening."

Regarding the IT sector's challenges from AI transformation, "Some players risk business model disruption if they fail to adapt; others adapting quickly could unlock new opportunities in building AI ecosystems. Valuations in IT have corrected significantly, offering potential risk-reward for patient, selective investors."

On portfolio strategy, Bahety's firm remains positive on manufacturing overall, driven by budget emphasis and recent trade deals. Key bullish sectors include CDMO and pharma, auto and ancillaries, textiles, power/infrastructure capital goods, and consumer discretionary post-GST cuts.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)