Daily Voice: OmniScience Capital's Ashwini Shami sees strong growth in power, logistics, professional services in 2026

Ashwini Shami is the President and Chief Portfolio Manager at OmniScience Capital

Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital believes banking and financial services are likely to be repriced over the next few quarters as corporate capex picks up.

Power, logistics and professional services represent other strong growth opportunities in 2026 that are currently available at significant discounts to intrinsic value, he said in an interview to Moneycontrol.

Meanwhile, with 125 basis points of rate cuts already delivered this year, along with other growth-supportive measures such as personal tax relaxations and GST rate cuts, the RBI has no immediate urgency to cut rates further, but with inflation below the lower end of the RBI’s target range, another rate cut in 2026 cannot be ruled out.

Do you expect 2026 to be a year dominated by large caps over midcaps and small caps?

From a valuation standpoint, large caps have significant pockets of favourably priced companies compared with midcaps. In the small-cap space, given the larger pool of companies in the segment, one can still identify mispriced opportunities. The Nifty 100 index is currently at 22x, whereas the Nifty Midcap 150 and Nifty Small-cap 250 indices trade at 32x and 28x trailing 12-month earnings, respectively.

Do you think the year gone by (2025) was challenging for the Indian market compared with global markets and other asset classes? What is your outlook for next year?

Over the last year, the Nasdaq 100 and S&P 500 have seen strong rallies driven by a select group of AI stocks, which has taken many of these stocks to premium valuations. Given that the trailing P/E for the S&P 500 index is 28 compared with 22 for the Nifty 100, and considering the strong growth momentum of the Indian economy, the outlook for the Indian market remains favourable.

Do you believe the market has already priced in the strong earnings growth expected in the second half of FY26?

There is a strong likelihood of large caps repricing as economic growth sustains in the second half of the year. The underperformance of mid- and small-cap segments over the last year has rationalised valuations to some extent. However, the space still appears fully priced.

FII flows and rupee depreciation—amid evolving India–US trade deal negotiations, a widening current account deficit, and interest rate cuts—are some of the key factors that will determine market direction going forward.

Do you see meaningful opportunities in engineering and pharmaceutical companies?

As we move through a massive capex cycle focused on infrastructure, energy transition and manufacturing, the engineering space has strong growth potential for more than a decade. While there are pockets of extreme overvaluation in some companies, we see favourable valuations and good growth opportunities in sub-industries such as construction and engineering, renewables, and select machinery and equipment manufacturers.

Do you think the increased supply of paper (IPOs) going forward could act as a headwind for the Indian market?

IPOs bring new investment ideas to the market and are healthy for the markets in the long run. Structurally, IPOs are priced at a premium to intrinsic value, yet investors are often attracted to these offerings while chasing listing gains and new businesses. This may result in some irrational capital allocation, especially during bull-market phases.

However, this is not a major concern for the overall market, as the typical size of IPOs in a year is relatively small compared with total market capitalization.

After a 125 bps cut in the repo rate, do you see any significant scope for further rate cuts in 2026?

With inflation below the lower end of the RBI’s target range, another rate cut in 2026 cannot be ruled out. The central bank will be monitoring economic growth and is likely to take action if there are indications of a slowdown over the next couple of quarters.

With 125 basis points of rate cuts already delivered this year, along with other growth-supportive measures such as personal tax relaxations and GST rate cuts, the RBI has no immediate urgency to cut rates further.

Which sectors are likely to dominate the headlines in 2026?

Banking and financial services are likely to be repriced over the next few quarters as corporate capex picks up. Retail segments are also expected to deliver strong growth supported by GST cuts, a lower interest rate environment and rising affordable housing demand.

Power, logistics and professional services represent other strong growth opportunities that are currently available at significant discounts to intrinsic value.