When asked about the outlook for smaller companies, Goel highlighted that earnings appear to be nearing a turning point. “We are looking at an inflection point as far as earnings are concerned for the small and the midcap space. We have seen last four-five quarters have been pretty weak for the earnings as a whole,” he said.
According to him, the combination of monetary easing, GST and direct tax cuts, and aggressive public infrastructure spending is setting the stage for a cyclical improvement. As the broader economy gains momentum, he expects the smallcap segment—after several quarters of decline—to deliver a “strong 15-16% kind of earnings growth” over the next four to six quarters. He added that the ongoing correction through 2025 is creating “attractive entry opportunities, particularly for the smallcap space.”
Cyclical Sectors Set to Lead
Goel sees leadership emerging firmly from domestic cyclicals as India heads into 2026. Sectors such as banking, financial services and automobiles, he believes, are poised to remain strong outperformers. “The cyclical sectors like BFSI and auto will continue to be the leaders,” he noted, pointing out the impact of GST cuts on auto demand across four-wheelers, two-wheelers and commercial vehicles.
BFSI, he said, still offers compelling valuations with healthy asset quality and should benefit from further rate cuts and improving credit momentum. He also expects engineering and capital goods companies to post healthy numbers as the government’s infrastructure push filters through order books.
Oil Marketing Companies: Tailwinds Intact
On the energy front, the outlook for oil marketing companies remains favourable, according to Goel. Global supply trends—particularly robust non-OPEC output—should keep crude prices contained. This stability, he said, will support domestic refiners and fuel retailers.
“We expect the oil prices to continue to be well behaved. In that scenario, the marketing margin for Indian OMCs should continue to be pretty robust,” he remarked, adding that current margins of over ₹4 per litre on petrol and diesel are likely to persist for now. A strengthening refining cycle, he believes, further bolsters profitability prospects over the coming quarters.
Capital Market Plays: Select Opportunities
On capital market-linked stocks such as BSE and Angel One, Goel remains constructive but selective. He reiterated the durability of the financialisation trend in India. “Financial savings as a theme has a lot of legs. We believe that will remain attractive medium-term story,” he said.
Asset management companies, in his view, stand out due to their operating leverage, while certain wealth management firms continue to show steady earnings momentum. This makes the overall space appealing for medium-term investors willing to ride sectoral shifts.
