“Even when we look at India’s defence budget it is growing year over year. In FY26, consumer staples and defence sectors are emerging as reliable plays. Essentials offer stability due to steady demand, while defence and aerospace are gaining momentum amid rising military spending,” he says.
Edited excerpts from a chat:
In a world riddled with geopolitical tremors, how are savvy investors reshuffling their portfolios to stay shockproof?
Some Investors are shifting toward safe-haven assets like gold, U.S. Treasuries, and defensive sectors such as healthcare and consumer staples. Geographic diversification, higher cash holdings, and exposure to real assets like commodities and real estate offer protection. By using derivatives, investors can protect against downside risk or benefit from volatility. Additionally, maintaining higher levels of cash or liquid assets can enable quick responses to rapidly changing global conditions.
With sectoral rotations becoming more than just a tactical play, which industries are emerging as the safe harbours of FY26?
In FY26, consumer staples and defense sectors are emerging as reliable plays. Essentials offer stability due to steady demand, while defence and aerospace are gaining momentum amid rising military spending. These sectors provide a mix of resilience, pricing power, and moderate growth potential, making them strong candidates for portfolio safety during ongoing geopolitical uncertainty.
Do you think that the positive momentum that we have seen in defence stocks is here to stay for a longer term amid rising tensions with Pakistan. What is the best way to play the defence theme?
In the current global environment due to escalating geopolitical tensions, nations are increasingly prioritizing defence preparedness, leading to a notable surge in military expenditures worldwide. Especially amid tensions with Pakistan this momentum is likely for the long term. Even when we look at India’s defence budget it is growing year over year. In FY26, consumer staples and defence sectors are emerging as reliable plays. Essentials offer stability due to steady demand, while defence and aerospace are gaining momentum amid rising military spending. These sectors provide a mix of resilience, pricing power, and moderate growth potential, making them strong candidates for portfolio safety during ongoing geopolitical uncertainty.
What is your reading of the Q4 numbers that you have seen so far? Which sectors stand out and which ones have disappointed?
Q4 FY25 earnings showed strong performance from housing finance, real estate, insurance, and power sectors due to demand and margin improvements. In contrast, IT and FMCG disappointed due to weak client sentiment and rural demand, though FMCG margins improved. FMCG players faced sluggish rural demand and weak volume growth, although margin expansion offered some respite. Overall, earnings highlight a clear sectoral divergence in market performance.
Smallcap stocks have bounced back in the last 2 months. Do you think this upside is here to stay?
The Smallcap index hit an all-time high of 19,716 in December 2024 but witnessed a sharp correction of over 25% in the following two months. However, since March 2025, the index has shown a strong recovery, reaching a high of 17,065 in April. The smallcap recovery since March suggests improving sentiment, but after a sharp rebound, a short-term pullback is possible. Existing investors may consider partial profit booking, while new entrants should wait for a 5–7% dip before adding exposure. The outlook remains constructive, but a healthy consolidation could follow recent gains.
FIIs have been buying Indian stocks non-stop amid the evolving geopolitical landscape. Do you think sustained buying by FIIs is strong enough to push the market higher or can be hit by profit booking from domestic investors?
Foreign Institutional Investors (FIIs) began accelerating their fund outflows from the Indian market around October 2024, shortly after China announced a series of economic stimulus measures, including cuts to the reserve requirement ratio (RRR) and policy interest rates. FII buying has resumed due to India’s stable outlook and global shifts, including U.S.–China trade tensions. However, rising DII ownership offers stability and may cushion volatility. While FII flows can lift markets, potential DII profit-taking and global uncertainty could limit upside, leading to a more balanced and resilient market, with a higher share of DII ownership, the Indian market is likely to become more protected from global shocks, offering greater resilience against external factors.
Where do you See Nifty ending 2026 at? Will it be another year of solid positive returns?
Predicting the exact level of the Nifty index by 2026 is challenging, as it depends on numerous factors including domestic economic performance, global market conditions, and geopolitical developments. Nifty may trade between 22,000 and 26,000 by end-2026. While positive returns are possible, the journey is likely to be volatile. Macroeconomic data, earnings, and global events will guide direction. Investors should expect consolidation and short-term pullbacks along the way, and adopt a cautious yet opportunity-focused approach.
