Daily Voice | Market correction may spark multi-year bull run if Budget boosts infra and consumption: Himani Shah

Himani Shah is the Co-Fund Manager at Alchemy Capital Management

• Markets are not looking for a ‘populist’ budget, but a ‘pragmatic’ one
• Market correction sets stage for multi-year bull run if Budget backs Rs 11 trillion infra spend and middle-class consumption
• Expect spotlight to be on consumer discretionary & retail, infra & industrials, and financials in budget

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Markets are not looking for a ‘populist’ budget, but a ‘pragmatic’ one, according to Himani Shah, the Co-Fund Manager at Alchemy Capital Management.

If the government can demonstrate a roadmap that protects its Rs 11 trillion infrastructure commitment while simultaneously providing the middle class with the disposable income to drive consumption, we believe the current market correction will pave the way for a multi-year bull run, she said in an interview with Moneycontrol.

As we approach the Union Budget 2026, she expects the spotlight to be on sectors such as consumer discretionary and retail, infrastructure and industrials, and financials.

Do you think domestic fundamentals will provide strong support to Indian equities despite negative global cues such as tariff concerns and geopolitical issues, and help push the market higher in 2026 once the global-cues-driven uncertainty settles?

From a fundamental perspective, the ‘India Story’ remains remarkably resilient.

While global headlines are dominated by geopolitical volatility and trade concerns, our domestic indicators are decoupled in several key areas. We are witnessing a structural revival in manufacturing, with recent data indicating a 12-month high and an 8% growth rate.

Furthermore, the strategic cuts in Income Tax and GST have acted as a significant liquidity injection for the middle class, successfully driving consumer spending. We believe that once the global ‘noise’ settles, the market will re-rate based on these robust internal growth drivers, in our view.

Do you expect the market to deliver mid-to-high single-digit growth over the next 12 months, despite the potential for underperformance in the near term?

From a strategic standpoint, we do anticipate that the market may deliver mid-to-high single-digit growth over the next 12 months. While we expect a period of near-term underperformance as the market digests global volatility and cues-driven uncertainty, the fundamental 'real economy' indicators remain highly encouraging.

Our conviction is supported by high-frequency data, specifically the resurgence in auto sales (up 17-23%), retail momentum, and credit growth in the early teens. This suggests that recent tax reforms are effectively stimulating domestic demand. However, the 'flattish' GST collection, growing at only 6% in December 2025, remains the primary variable we are monitoring.

Should we see an uptick in GST collections, a mid-to-high single-digit index return would represent a conservative and achievable floor. Crucially, this growth could be high-quality, underpinned by genuine earnings expansion as valuations have already corrected meaningfully.

Do you expect continued momentum in consumer discretionary stocks and relatively less focus on capital expenditure in the Union Budget 2026?

As we approach the Union Budget 2026, the Indian economy finds itself at a delicate inflection point. While we have spent the last few years aggressively building the ‘hard’ infrastructure of the nation, the current market narrative reflects a tug-of-war between sustaining high-multiplier capital expenditure (capex) and reviving a stagnant consumption base.

India must achieve a ‘Golden Mean’ between fiscal prudence and growth-focused stimulus.

In an era of fragmenting global trade and rising geopolitical tensions, India cannot afford to take its foot off the pedal on capex. With nations increasingly looking inward and protectionism on the rise, in our view, the Budget must prioritise self-sufficiency. We are seeing a distinct global appetite for India to serve as a manufacturing alternative, driven by our vast, young labour force.

However, to truly capture the ‘China+1’ opportunity, the government must continue funding high-impact infrastructure such as digital grids, EMS (Electronics Manufacturing Services) and renewable energy ecosystems. Maintaining the Rs 11 trillion capex momentum is no longer just an economic goal; it is a strategic necessity to ensure that our young workforce is backed by world-class industrial efficiency.

We remain bullish on capital goods and industrials as long as the government maintains its infrastructure commitment. Simultaneously, we are watching consumer discretionary and capital market plays.

Markets are not looking for a ‘populist’ budget, but a ‘pragmatic’ one. If the government can demonstrate a roadmap that protects its Rs 11 trillion infrastructure commitment while simultaneously providing the middle class with the disposable income to drive consumption, we believe the current market correction will pave the way for a multi-year bull run.

Do you rule out the possibility of earnings downgrades from Q4 FY26 onward?

We cannot entirely rule out earnings volatility. While Q3FY26 results so far have shown substantial growth and revival, the sustainability of this trend into Q4FY26 and beyond is contingent on the government's ability to maintain spending levels. If the government is forced to pull back on its Rs 11 trillion capex plan due to fiscal constraints, we may see a slight cooling in the industrial and infrastructure-linked earnings. We remain cautiously optimistic and are watching the Q4FY26 run rate closely.

Do you agree that employment growth is likely to become a major global challenge in the context of increasing AI adoption?

We believe that increasing AI adoption poses a significant structural challenge to global employment growth. In our view, this shift is primarily a workforce ‘displacement’ rather than a total pause in hiring. We are witnessing a historical inversion where white-collar, cognitive roles face deflationary pressures from automation, while the ‘real economy’ —manufacturing, specialised trades, and physical infrastructure—remains labour-hungry and resilient.

From an investment standpoint, this creates a clear dichotomy: we focus on companies that utilise AI to expand operating margins without linearly increasing headcount, as this boosts Earnings Per Share (EPS). We stay cautious on mass-market consumption themes that rely heavily on broad-based white-collar wage growth. Accordingly, our strategy pivots toward ‘physical world’ sectors such as industrials and capital goods, where human expertise remains irreplaceable. We remain underweight on traditional services that are vulnerable to AI-driven commoditisation.

Which sectors do you believe are likely to be in the limelight in the Union Budget?

As we approach the Union Budget 2026, we expect the spotlight to be on:

1. Consumer Discretionary and Retail: To see if the government provides further GST rationalisation to sustain the current growth in lifestyle segments.

2. Infrastructure and Industrials: Focus will be on whether the government stays the course on its massive capex targets or pivots toward fiscal consolidation.

3. Financials: Any budgetary measures regarding liquidity, banking reforms or capital market reforms may be a major catalyst for the Financials pack.