The year 2026 will not be a year of ups and downs but of stability for the stock markets. This has been told in the report of Motilal Oswal Private Wealth. It says that this year it would be better to increase focus on largecap shares and flexicap strategy. In terms of valuation, there are opportunities in large cap stocks. The picture regarding the earnings of companies is becoming clear. Also, focus on profit and execution is increasing.
Are there investment opportunities in defence, data centers and e-commerce?
Amit Gupta, Head (Equity), Motilal Oswal Private Wealth, said in an event that investment opportunities are visible in defence, data centers and e-commerce. Focus on defense has increased. The government has increased capital expenditure. The focus of data centers and electronic manufacturing seems to be increasing in India’s growth model.
Why increased focus on defence, energy transition and advanced manufacturing?
“Data centers, in particular, are emerging as the new backbone of the economy. Large FDI inflows are expected to drive demand across an entire ecosystem, including power, renewables, nuclear energy, servers, cables, cooling systems and electronics,” he said. Along with this, the importance of critical minerals like copper and rare earth has increased due to the government’s increased focus on defence, energy transition and advanced manufacturing.
What has caused the valuations of Indian markets to decline?
According to CIO Sandipan Roy, there was a big fall in Indian stock markets after reaching all-time high in September 2024. MSCI India’s performance has been about 31 percent weaker in dollar terms compared to MSCI Emerging Markets. Due to this, the valuations of Indian markets have decreased compared to emerging markets. The valuation premium has declined from a long-term average of 78 per cent to around 47 per cent. According to Motilal Oswal report, this has improved the risk-reward profile for largecap stocks.
Is there an investment opportunity in smallcap and midcap stocks?
According to the report, midcap and smallcap stocks have fallen significantly from their all-time highs. This has led to a decline in valuations. Despite this, a phase of consolidation may be visible in them. In such a situation, instead of rushing into investment, investors need to keep an eye on buying opportunities at lower levels in selected stocks. If the picture regarding earnings becomes clear in the coming quarters, there may be opportunities to increase investment in selected stocks.
Can the rise in gold prices continue?
Analysts say that gold will remain a strategic asset for the portfolio. Due to geopolitical uncertainty, purchases of gold by central banks, focus on finding alternatives to the dollar and increasing debt in the world, the shine of gold will continue to increase. Gold prices have seen a rise amid rising bond yields and strengthening dollar. The supply of silver has been less than the demand for the last several years. On the other hand, its use is increasing in energy, electric vehicles and technology. However, after high fluctuations, consolidation may be seen in silver.