Sandeep Tandon's 2026 outlook: Favour old economy over new age tech

Disclaimer This is an AI-assisted live blog with updates from multiple sources Disclaimer

At previous close, the Sensex was down -120.21 points (-0.14 percent) at 84,559.65, and the Nifty was down -41.55 points (-0.16 percent) at 25,818.55

As the market heads into a new year, Sandeep Tandon, Founder and CIO at Quant Mutual Fund, has outlined a cautious yet opportunistic outlook for 2026, advocating for a significant strategic shift away from overhyped new-age technology companies towards undervalued old economy stocks. Speaking with CNBC TV18, Tandon acknowledged the prevailing optimism but stressed that markets, both in India and globally, are entering a difficult and complex phase for the longer term.

Tandon's primary concern revolves around the global interest rate environment, which he described as being in a "structured bull run." He pointed to the Bank of Japan's recent rate hike, expecting further increases next year. "Interest rates are gradually inching up, which means the P/E contraction in the equity market will happen," he warned. This, he believes, will particularly affect "new-age companies" and "hype stocks" that have seen maximum rerating without corresponding earnings growth. Tandon anticipates a reversal of the trend seen in 2025, where capital flowed into these growth-oriented names.

Despite the challenging global backdrop marked by the end of an extraordinary liquidity cycle, Tandon sees India in a relatively stronger position. "India is more constructive on a relative basis," he stated, citing the country's macro picture, recent market underperformance, and a significant reduction in its beta. He also noted that his firm believes the USD/INR currency pair is in the final stages of peaking out.

For 2026, the central theme of Tandon's strategy is a "complete reversal" of the previous year's momentum trade. "We have to look at under-owned stocks, undervalued stocks, and less-hyped stocks," he advised, emphasising the need to prioritise liquidity and avoid illiquid names in a one-year timeframe. He identified several sectors fitting this thesis:

• Pharmaceuticals: Tandon is "extremely bullish" on this space, calling it a "no-brainer trade." He sees immense opportunity, comparable to the IT boom from two decades ago, particularly in Indian generics, contract development and manufacturing organisations (CDMOs), and biologics. He remains unfazed by regulatory noise, viewing it as a buying opportunity. The pharma sector is a "grossly overweight" position in his firm's portfolio.
• Insurance: This is another key area Tandon highlighted as being "completely neglected." He noted that while most analysts have given up on the sector, it is showing signs of bottoming out, presenting a classic contrarian opportunity.
• Large Caps and Others: He also sees value in large-cap energy, infrastructure, and power companies. Within the broader financial services space, he remains bullish on select Non-Banking Financial Companies (NBFCs) and believes the food-processing segment of the Fast-Moving Consumer Goods (FMCG) sector holds promise.

Drawing a parallel to his fund's recent successful bet on the IT sector, which they entered when sentiment was at its lowest, Tandon reiterated his strategy of buying into sectors when analysts capitulate. "When the best of the analysts give up, that's the time for me to look at some of these names," he concluded.