Daily Voice: This CEO sees portfolio opportunities in financial services, automobiles, and healthcare for 2026

Mohit Bhatia is the CEO at Bank of India Mutual Fund

• A potential India-US trade deal in 2026 could be a healthy sign to enhance market access, strengthen supply chain benefitting the sectors specially electronics, automobiles, and pharmaceuticals, Mohit Bhatia said.

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According to Mohit Bhatia, the CEO at Bank of India Mutual Fund, financial services, automobiles, and healthcare sectors look relatively a potential opportunity for 2026 portfolio.

"Financial services sector expects the credit expansion and interest rate cycles could support growth," he said, adding automobiles sector sentiment is turning increasingly positive, supported by expectations of lower interest rates, higher disposable income from tax savings, and upcoming 8th pay Commission, and the recent GST Cut.

As far as the Union Budget expectations are concerned, the market expects policy support to continue, with measures to boost economy and earnings growth, capex primarily from government side which could be focused towards infrastructure spending, he said in an interview to Moneycontrol.

Do you strongly believe that the worst is over for the equity market, and that both the benchmark indices and the broader markets are set to deliver double-digit gains in 2026?

Looking back, we realise that some of the key pressure points are easing. Some of the key growth enablers like increased capacity, capex revival, and GST rate improvements are definitely helping along with consumer-led demand that is giving the market a breather. Government and private investments are kicking in, supporting growth along with GST rate rationalization and compliance ease helping the businesses.

Moving ahead, high-frequency indicators continue to suggest resilient demand, which should support earnings momentum across sectors. The macroeconomic setup of India is expected to aid the stabilisation of the INR following its recent depreciation, largely driven by a temporary demand-supply mismatch for USD in the onshore market.

Global factors, however, remain critical. Any delay in the signing of the USA free trade deal, or the emergence of broader geopolitical challenges, could weigh on investor sentiment and market performance. Additionally, volatility in crude oil prices and global interest rate trajectories will need close monitoring, as they directly impact inflation expectations and liquidity conditions.

What are the three key factors likely to impact equity markets in 2026?

Sustainability of Earnings Growth: Corporate earnings are expected to improve, driven by higher government spending, stable GST collections, and personal income tax relief.

US-India Trade Deal: A resolution on trade issues could attract foreign investors and support exports.

GoI Capex: Focus on infrastructure and private sector investment could drive growth.

Is large-scale FPI inflow likely to occur only after the US trade deal in 2026?

While a US trade deal could boost investor confidence, it's uncertain if large-scale FPI inflow will occur only after the deal. A potential India-US trade deal in 2026 could be a healthy sign to enhance market access, strengthen supply chain benefitting the sectors specially electronics, automobiles, and pharmaceuticals.

Do you think India is a very lucrative market for NBFCs?

India's growing economy and increasing financial inclusion make it an attractive market for NBFCs, but specific opportunities and challenges depend on various factors. India's credit penetration is indeed low, especially compared to other emerging markets. With a huge population and growing middle class, there's massive potential for credit growth. From the overall segment opportunity, diversified NBFCs including HFCs continued to witness steady loan growth led by underlying demand from retail segment.

Do you expect more measures from the government in the Union Budget 2026 to boost economy and earnings growth?

The year 2025 started with significant tax relief, raising the limit to Rs 12 lakh with recalibrating the slab rates in the new regime. Also, the mid-year review on GST rates boosted the sentiments and much needed support to the consumption led demand and announcement of FDI of 100% in the Insurance sector.

The market expects policy support to continue, with measures to boost economy and earnings growth, capex primarily from government side which could be focused towards infrastructure spending. Measures around reducing import dependence, possibly via higher customs duties and targeted incentives for local manufacturing could help strengthen the domestic ecosystem.

Do you foresee a continuation of the RBI’s rate-cut cycle in 2026, or will the central bank opt for a prolonged pause?

The Reserve Bank of India closed out 2025 with a policy statement that is both strategically calibrated and firmly anchored in macroeconomic realities. Against the backdrop of historic disinflation and resilient economic momentum, the Monetary Policy Committee (MPC) delivered a 25bps rate cut, lowering the repo rate to 5.25%, while maintaining its neutral stance.

The RBI’s soft-but-measured tone creates an environment in which fixed-income remains a compelling tactical allocation even as equities benefit from strong macro undercurrents. With one more rate cut still on the table—and liquidity guidance turning explicitly supportive—the fixed income outlook enters 2026 on exceptionally firm footing. The RBI may continue its rate-cut cycle in 2026, depending on inflation trends and economic growth.

What is your contrarian investment bet for 2026?

Indian IT sector has remained muted relative to global peers in the year 2025 in view of the apparent lag on AI related initiatives & earnings guidance.

Given the strong talent pool, healthy balance sheet, global client reach coupled with structural digital initiatives from the Government of India, the Indian industry / sector may see potential winners in the medium to long term.

Which three sectors are on your radar for building a 2026 portfolio?

Overall, while near-term uncertainties persist, the medium-term outlook remains supportive, underpinned by domestic demand resilience, currency stabilisation, and robust earnings growth. A balanced approach favouring small-caps for growth potential while maintaining exposure to large-caps for stability could help investors navigate this evolving landscape. From the sectoral exposure perspective, some of the sectors which looks relatively a potential opportunity:

Financial Services: Financial Services as a sector has shown improvement in earnings and also with around 5 industries which this sector encompasses have shown relatively better resilience with high growth businesses viz. capital markets, fintech and general insurance with a mature business mix of Bank as well as Life Insurance companies. The sector expects the credit expansion and interest rate cycles could support growth.

Automobiles: Automobile companies reported a good set of numbers in Q2FY26, supported by the GST cut, strong festive demand, continued premiumization, and healthy growth in exports. Premiumization trend continued in Q2FY26, driving both volume growth and better realization across segments. Overall sector sentiment is turning increasingly positive, supported by expectations of lower interest rates, higher disposable income from tax savings, and upcoming 8th pay Commission, and the recent GST Cut.

Healthcare: This sector showcases stable demand and improving economic activity could benefit the sector. Within the sector, Domestic business is expected to maintain high single digit to double digit growth momentum with US generic launch pipeline remains thin. Hospital sector growth is likely to mirror bed capacity addition and price increase going forward.

How do you assess the outlook for banking and financial services funds in light of recent economic indicators and regulatory changes?

We are at a very different point in the financial cycle. Indian bank balance sheets are the cleanest in decades—NPAs are at cycle lows, capital adequacy is strong, and ROEs are structurally higher. This creates operating leverage as credit growth sustains in the low-to-mid teens. Also, the valuations are comfortable from entry point of view. Despite strong fundamentals, BFSI is trading at a discount to the broader market on P/B, especially banks.

We believe, this combination of earnings visibility plus reasonable valuations is rare. Finally, structural financialisation is a long runway theme—MF AUM, insurance penetration, demat accounts and digital payments are all compounding faster than GDP.