Daily Voice: DSP MF’s Vinit Sambre suggests top investment themes for 2026, avoids fresh aggressive allocations to gold and silver amid expensive valuations

Vinit Sambre is the Head – Equities at DSP Mutual Fund

• According to Vinit Sambre, both gold and silver appear expensive relative to their long-term history, and recent returns may be difficult to sustain.

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Vinit Sambre, Head – Equities at DSP Mutual Fund, suggested a few top investment themes for 2026. He is constructive on the IT sector, noting that valuations look reasonable and that any improvement in demand—AI-led or otherwise—could unlock upside.

He also favors banks and NBFCs as a play on potential rate cuts, healthy credit growth, and broadly stable asset quality. Real estate could see a pickup in activity as new launches recover after a softer 2025, particularly among stronger developers, he said in an interview with Moneycontrol.

According to him, both gold and silver appear expensive relative to their long-term history, and recent returns may be difficult to sustain. “With limited upside and a weak margin of safety, we would avoid making fresh, aggressive allocations,” he advised.

Do you expect rapid AI growth in India in 2026? Do you plan to significantly focus on the technology space next year?

AI is still evolving, and anyone claiming to fully understand its end-game is probably overstating it. But one thing is clear, India has an advantage in terms of talent. Our engineers, developers and data scientists give us a strong base to participate meaningfully in the global AI wave.

We’re already seeing Indian IT leaders like TCS, Infosys, HCL Technologies and others, launch AI-led services. As companies everywhere embed AI into workflows, demand for implementation, integration and support should keep rising.

Given this backdrop, we are constructive on Indian IT. The sector has underperformed in CY25, and valuations aren’t stretched. Any improvement in demand, AI-driven or otherwise can create attractive value over time.

What are your top themes to play in 2026, and why?

For 2026, a few themes stand out. We are constructive on IT, where valuations look reasonable and any improvement in demand, AI-led or otherwise can unlock upside.

We also like banks and NBFCs as a play on rate cuts, healthy credit growth and broadly stable asset quality. In consumers, policy support and lower rates may help demand, but shifting wallet shares and intense competition mean we will stay very selective.

Real estate could see activity pick up as new launches recover after a softer 2025, especially among stronger developers. And agri-inputs look attractive after valuation corrections driven by weak earnings in H1FY26, with a better Rabi outlook potentially supporting recovery. These are broad themes, but disciplined, bottom-up stock selection will matter most.

Do you continue to bet on gold with a target of $5,000 an ounce in 2026, and should it remain a strong part of every investor’s portfolio?

We don’t see a case for chasing gold to levels like $5,000. Based on our in house research (DSP Netra), both gold and silver already look expensive versus their long-term history, and recent returns appear hard to sustain. With limited upside and a weak margin of safety, we would avoid making fresh, aggressive allocations. Investors who already own some gold can treat it as diversification, but we wouldn’t recommend increasing exposure meaningfully from here.

Do you expect digital gold to grow with the development of AI?

I wouldn’t link the growth of digital gold directly to AI. Digital gold is more about convenience, access and transparency. It lets investors buy, store and sell gold easily without worrying about logistics.

AI may help improve platforms, pricing efficiency and customer experience, but it doesn’t change the underlying economics of gold. So while digital gold may see steady adoption as technology improves, its long-term returns will still depend on gold as an asset, not on AI itself.

Do you expect equities to outperform gold in 2026, considering expectations of a strong earnings revival?

Yes, we would lean toward equities over gold in 2026. Gold already looks expensive and offers limited margin of safety. Equities, on the other hand, are coming off several quarters of muted, single-digit earnings growth, so the base is relatively low.

While a sharp earnings revival is not immediately visible in short term, especially with global uncertainties like tariffs, we do think the phase of continuous downgrades may be behind us. That setup generally favours equities over gold on a two-to-three-year view, even if the journey remains volatile.

What are your earnings growth expectations for Q3 FY26, starting next month? Which sectors are likely to see earnings upgrades?

For Q3 FY26, we expect earnings momentum to remain fairly muted. Demand seems to have softened after the festive season, with some recovery likely getting pushed out.

In banks, credit growth is improving, but margins could stay under pressure as lending rates reset faster than deposits in a rate-cutting environment. IT may also be subdued, given seasonal furloughs and no clear signs of acceleration beyond recent trends.

On the brighter side, we see pockets of strength: non-ferrous metals benefiting from higher prices, oil marketing companies, wire and cable players, and jewellers could continue to report healthy numbers. Overall, this looks more like a selective, stock-specific quarter than a broad earnings upgrade cycle.

Do you expect strong earnings growth in the consumer discretionary sector throughout next year?

We’re cautiously optimistic on consumer discretionary sector. Policy support, lower interest rates and improving sentiment can help demand, but wallet-share shifts and intense competition make the space tricky. So, at a top-down level we remain positive but success here will be very stock-specific rather than a broad, sector-wide earnings surge.

Do you think the weakness in the rupee against the US dollar may persist in 2026?

The rupee’s direction will largely depend on factors such as tariff uncertainty, foreign capital flows, interest-rate differentials, oil prices and the strength of the US dollar. On many of these, India is reasonably well placed — oil prices are manageable, the current account is under control, FX reserves are healthy and rate differentials remain supportive.

Potential capital inflows, especially after last year’s FII outflows, also provide a cushion against sharp depreciation. If US tariff issues are resolved and corporate earnings continue to recover, we could even see some gradual strengthening of the rupee over time.