Daily Voice: Lighthouse Canton’s Pradeep Gupta sees capex, consumption and credit growth moving in sync as markets head into 2026

We believe there is a far better & constructive storyline in place for year 2026. Much of the macro induced distortions are behind us, problematic dynamics have been worked through & well absorbed thus setting the stage for fresh set of opportunity cycle. We have already witnessed broad based policy acceleration to push demand side of the table, systemic liquidity, capex & credit. Inflation remains well within comfortable range thus providing conducive environment for both consumption and investment.

Over the past seven years, combined central and state capex has nearly tripled with steady capacity utilisation at about 75% for eleven consecutive quarters. Private-sector capex, however, had remained subdued due to weak consumption and tighter financial conditions. There has been a fundamental shift here. Government has provided much needed consumption support through GST cuts & income-tax reductions, transferring nearly Rs 3 trillion to households. Including the benefit of lower rates, the total boost approaches Rs 4 trillion.

We are likely to witness capex, consumption and credit growth moving in sync as we head into 2026. This strategic expansion is likely to lift corporate earnings out of the weakened phase seen in FY25. The current setup is particularly attractive for the year 2026 with strengthening macro & micro fundamentals, expected up move in earnings trajectory, improving FII flows, easing global uncertainty & collective strengthening visibility for a gradual upcycle.

Do you believe companies coming up for IPOs are currently trading at bubble-like valuations with limited margin of safety?

There certainly is deviation from what one may call as a reasonable value. Ongoing surge in non-institutional buying does mirror speculative market cycles seen in past. Prices are being driven less by long-term cash-flow expectations but more so by overall exuberance around this space. But at the outset, it also reflects upon vibrant economy & capital market, robust investor interest, and a maturing startup ecosystem well geared to reward entrepreneurs.

There are some high-quality names which have hit the market. Current pipeline looks fairly robust though not every opportunity after listing has been rewarding. The actual listing gains are more modest compared to previous booms, showing the market is focusing on predictable earnings and strong balance sheets. New-age tech & diverse businesses are tapping the market, but only those with clear growth stories are sustaining post-listing performance. Hence selectivity should be the first order of anchoring for any long-term exposures.

Another key consideration should be to assess the overall cause whether companies are seeking capital for future expansion or rather it is functioning as a strategic, systemic exit vehicle for founders, promoters, and existing investors. Investors should look at the promoters’ track record, management team, and the company’s free float before making investment decisions,

At the end, fundamentals will have to be in sync with the ask & any long standing disconnect will eventually be course corrected by the market.

Do you expect the government to announce additional reforms in 2026 to keep the growth engine strong going forward?

Certainly Yes. Government has already announced the formation of a task force to plan out next-generation reforms aimed at accelerating India’s economic growth with a vision to become a developed nation by 2047. We can expect range of reforms & continued policy measures being undertaken for Ease of doing business, Self-reliance, FDI, Infrastructure, Technology & Innovation, regulatory framework & laws, social welfare & other critical areas.

What do you see as the major risk factors for the market in the coming year?

External shocks can create near to mid-term volatility, particularly geopolitical led distortions & US led slowdown in global growth cycle. Risks are more likely to emanate from exogenous sources. Any prolonged delay in the India-US trade deal would be a negative & can hamper overall market sentiment along with export momentum.

Capex trajectory & associated revival is another critical area to watch out for. This needs to be seen with overall demand led scenario build up & continued momentum, especially for private capex.

Early signs are visible around earnings revival. While much of the valuation froth is behind us, any disappointment on overall earnings trajectory will be a big negative. Thus, reinforcing the need for consistency. Higher valuations for the broader market are another area. With an uneven earnings profile, any mild miss can lead to sizeable derating.

Are you bullish on all segments of the financial sector?

India’s financial sector is fundamentally strong, backed by robust credit growth, sharp improvement in NPAs, and healthy profitability, but our optimism varies across sub-segments. We are most constructive on private banks, given superior deposit franchises, tech-led efficiency, and visibility of 15–17% ROE.

PSU banks have improved with cleaner books, strong profits & trade at attractive valuations but require selectivity as margins could compress with rate cuts.

NBFCs look attractive in near-term with strong loan growth & lower funding costs, though longer term we expect leadership to shift back toward banks as liquidity normalizes.

Insurance remains a structural growth opportunity driven by low penetration and supportive reforms; we prefer strong private insurers despite elevated valuations. Fintech is a high-growth space underpinned by UPI scale and digital adoption, but profitability, competition, and regulation warrant a selective approach—scaled platforms with sustainable economics are preferred.

Capital market intermediaries benefit from rising retail participation, record demat additions, and strong SIP flows, though valuations for leaders are rich.

In summary, we are positive on the sector with higher conviction in private banks, retail-focused NBFCs, quality insurers, scalable fintech’s, and leading capital market platforms—while remaining selective within PSU banks and richly valued names.

What is your view on the IndiGo fiasco? What key lessons do you draw from this crisis?

This entire fiasco establishes the fact that scale requires operational flexibility, deep rooted control mechanism, strategic capacity management along with an architecture which aligns with changing dynamics including regulator led disruptions. It also quite highlighted structural weaknesses in the ecosystem given the concentrated nature of the industry at this juncture. An airline which controls 2/3rd of India’s domestic aviation market along with limited competitive players is bound to lead to systemic risk, sizeable cost of failure & huge consumer consequence which was evident here.

Key lessons going forward – Multi dimensional strategic management, operational agility which continues to get tested, stays resilient with adequate contingency measures along with concrete rebalancing with efficiency & reliability both.

Which sectors are on your radar for a 2026 portfolio, and why?

We expect a widespread sectoral leadership in 2026 with participation coming from Financials, Consumer discretionary, Healthcare Auto, Capital Goods with select new age companies.

Financials – Well capitalized balance sheets, solid asset quality, improving liquidity & strengthening credit.

Consumer Discretionary & Auto – GST rehaul, Income tax relief, lower borrowing costs, supporting discretionary demand.

Capital Goods & Allied sectors – Continued capex trajectory by the government & improved private capex participation due to demand led impetus.

Healthcare – Higher public spending, PLI led measures, rising insurance coverage.

New Age Themes – Defence, EV, Clean energy, Semiconductors given governments self-reliance agenda.

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