Stock Market Outlook 2026: Yogesh Patil, Equity CIO of LIC Mutual Fund, believes that the year 2026 may prove to be better than 2025.,
highlights
- The market may be in the range in the last days of the year, but now everyone’s eyes are on what new 2026 will bring for the market.
- Investors are interested in how the market will be in the coming year and in which sectors there can be better opportunities ahead.
- Yogesh Patil, Equity CIO, LIC Mutual Fund, had a special conversation with ET NOW Swadesh on all these issues.
Stock Market Outlook: The market outlook for the last days of 2025 remains weak. Due to the last days of the year and New Year holidays, the distance from the market is clearly visible. Although there is movement in select sectors, the big question is what will be the market mood in 2026 and which sectors should investors focus on. Due to the last days of the year and New Year holidays, the participation of investors is less, the effect of which is directly visible on the market movements.
After the Christmas holidays, the volumes in the market remained very low and Nifty and Nifty Bank were seen moving within a limited range. A slight fall of about 50–60 points was recorded in both Nifty and Nifty Bank. After the rise of the last three days, there was a break in the market on Wednesday and when the markets opened on Friday, December 26 after the holiday on Thursday, the atmosphere looked quite bleak. At the close of the market, the Sensex closed at the level of 85,041.45 points with a fall of 0.43% i.e. 367.25 points. Nifty closed at 26,042.30 points with a fall of 99.80 points.
How will the market be in 2026?
Yogesh Patil, Equity CIO of LIC Mutual Fund, believes that the year 2026 may prove to be better than 2025. According to him, earnings growth was a bit slow in 2025 due to elections, global uncertainty and trade-related concerns, but now the macro situation has improved and a strong comeback in earnings may be seen in the coming time.
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Yogesh Patil said that many stalled projects and approvals of the government are now slowly starting and the effect of GST cut will also be more clearly visible on consumption. He says that India’s situation is better than other countries and its effect will be visible in the results in the coming quarters.
Which sectors will be affected?
Talking about sectors, credit growth is expected to be better in the banking and financial space. Apart from this, Yogesh Patil is also very positive about capital goods, engineering and infrastructure sectors. New age sectors like defense manufacturing, specialty chemicals, CDMO, data centers and EMS are expected to witness strong growth in the next four to five years. Yogesh Patil believes that if India has to become a manufacturing hub, then continuous investment in infrastructure is necessary and this will take the capex growth forward.
Consumption vs Capex
Talking about consumption versus capex, capex-based growth is expected to be stronger in 2026. Discretionary consumption such as auto and consumer durables may continue to improve, while mass consumption may see a slight improvement after the GST cut but may not see a huge jump. On the recent rise in railway stocks, Yogesh Patil says that a rally may be seen due to expectations before the budget, but a lot will depend on government spending and valuation in this sector, hence there may be fluctuations in it.
What is the impact of American trade deal on the market?
Uncertainty regarding the trade deal still remains a big question for the market. Export oriented sectors like IT and Pharma are definitely affected by sentiment, but till now there has been no major negative signal in the export data. Export companies have definitely got some relief from the weakness of the rupee. He believes that as soon as there is clarity regarding the trade deal, there will be ease in investment and decisions.
When will FIIs return?
On the continuous selling of FIIs, Yogesh Patil says that high valuations, global bond yields and delay in earnings growth have been the main reasons for this. The PE of Nifty is around 22.5 and that of Smallcap is above 30, but if earnings growth returns and global uncertainty reduces then the return of FIIs is also possible. Overall, the market is currently in the range and volumes are weak, but the picture looks positive for 2026. He said that capex and new sectors can decide the direction of the market in the coming times.
Market highlights for 2026
- Uncertainty regarding trade deal is still putting pressure on the market
- There is an impact of sentiment on IT and Pharma, but there is no major negative impact on exports yet.
- Exporters are getting some relief from rupee’s depreciation.
- There will be clarity in investments and decisions once the trade deal is finalized.
- Capex-led growth is expected to be stronger in 2026.
- Discretionary consumption (auto, consumer durables) may continue to improve.
- There will be a slight improvement in mass consumption (FMCG etc.) after the GST cut, but a very sharp bounce is not expected.
Which sectors will be the focus in 2026?
According to Yogesh Patil, these sectors can perform better in the coming years. There is a possibility of good growth in these sectors for the next 4–5 years.
- BFSI (Banking and Financials) – Credit growth expected to improve
- Capital Goods and Engineering – Strong Capex Cycle
- Infrastructure – Government’s long-term investment plan
- Defense Manufacturing
- Specialty Chemicals
- CDMO
- Data Center and EMS (Electronics Manufacturing)
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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