Varun Goel, Senior Fund Manager at Mirae Asset Investment Managers (India), expects the government’s focus on infrastructure spending to continue in Budget 2026, with further impetus on roads, railways and green energy. In an interview with Mint, Goel shared his views on the Indian stock market outlook, Q3 earnings expectations and key risks facing the market. Edited excerpts:
What are your expectations from the Union Budget 2026? What can cheer the market?
We expect the focus on infrastructure spending to continue with further impetus on roads, railways and green energy. Defence allocation increase will be beneficial for the defence sector. Any rationalisation in capital gains/STT will be a positive.
What is your outlook for the domestic equity market for 2026?
FY26 has turned out to be a year of growth rebound for India. Significant monetary easing, GST and income tax cuts, good agricultural production and strong recovery in central government capex spending have resulted in a recovery of GDP growth.
Going forward, this growth rebound should get further strengthened and reflect in strong and corporate earnings.
Credit growth and corporate earnings are recovering, and infrastructure-led capex will get further strengthened in 2026.
Amid all domestic and global risks, which in your view is the biggest that investors should keep a close eye on?
Geopolitical tensions—whether stemming from trade disruptions, regional conflicts, or energy market instability—are undoubtedly contributing to near-term volatility. However, when we move past the headlines, the Indian growth story continues to look promising.
What should be our equity investment strategy at this juncture?
We expect a diversified equity fund like a flexi-cap to be the ideal vehicle for equity investments with a medium-term investment horizon. From a slightly longer-term perspective, Current volatility is creating attractive entry points for the small-cap space.
Historical trends show that when macro and sentiment-related headwinds ease, this segment tends to rebound strongly.
We expect a strong rebound in small-cap earnings in the next four to six quarters.
What should we buy? Which sectors do you see opportunities in?
We are focusing on businesses that have robust earnings visibility, prudent balance sheets, and scalable business models.
Over a 3–5-year horizon, these can emerge as meaningful compounders.
We are hopeful of revival in consumption, which will likely lead to more discretionary spending, and positive on manufacturing given the Government’s thrust on the Make in India strategy.
Domestic cyclical stories like BFSI, Auto capital goods should also do well. We remain constructive on the lending space.
The significant monetary easing carried out this year should lead to healthy growth for small banks, SFBs and NBFCs. The healthcare segment is geared towards healthy medium-term compounding, with hospitals and the diagnostics space seeing a strong shift from unorganised to organised.
Also, we see a secular growth opportunity in the CRAMS (contract research and manufacturing) space.
The portfolio is more geared towards capturing domestic economic recovery stories in BFSI, Auto, Capital goods and manufacturing and cautious on export segments.
What is driving strong inflows into flexi-cap funds? Can the momentum be sustained?
Flexi-cap funds are an excellent choice for investors looking for a single fund to fulfil their equity allocation needs.
These funds dynamically adjust their exposure across large, mid, and small-cap segments, offering a balanced mix of diversification and growth potential.
This flexibility makes them well-suited to varied market conditions and ideal for investors seeking to manage risk while benefiting from India’s broad market opportunities.
What is your assessment of Q3 earnings? Should we expect a healthy revival?
We expect an 8-10% earnings growth for Q3. While larger weightage sectors like banks, IT and consumption may deliver single-digit earnings growth, auto, NBFCs and metals should deliver robust double-digit earnings growth, thereby leading to a weighted average of around 8-10% for the quarter. The earnings recovery should get further strengthened in the next few quarters.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
