'2026 Is A Stock-Picker's Market': Kenneth Andrade Says Valuations Likely To Turn Attractive By Year-End

Patience, stock-picking and buying what hasn’t worked for a while — that is the investment strategy Kenneth Andrade believes will define 2026. The Founder and CIO of Old Bridge Mutual Fund says this is a market where investors need to “pick and choose,” focus on sectors that have underperformed for two to three years, and wait for cycles to reverse rather than chase momentum.

Capital protection first and growth later, he stresses, will be the key approach in a year marked more by time correction than fireworks.

Andrade notes that Indian equities have already come off an exceptional run between 2020 and 2024. After a sluggish 2025, he expects more of the same in 2026 — sideways movement rather than steep declines.

India, he points out, had become the most expensive market among global peers, and valuations are now undergoing a time correction, not a sharp price correction. He expects another six to seven months of range-bound markets with single-digit returns on the table and says market breadth has already weakened with more losers than gainers, despite the index holding up.

Geopolitics, too, does not offer clarity. Referring to recent global events, Andrade terms the environment uncertain and expects a continuation of what markets saw through 2025. Predicting outcomes is neither easy nor useful, he says — investors will simply have to “play it by ear” and hope nothing dramatic happens.

Flows remain central to the market story. While domestic investors continue to allocate to equities because they are constrained to the local market, FIIs, Andrade reminds, have no such compulsion and will only return when valuations become more attractive. IPOs, meanwhile, are pulling liquidity away from secondary markets. He believes that if the current pattern of 2025–2026 extends through the year, valuations should turn palatable by the end of the current calendar year.

On sectors, Andrade advocates going where performance has been poor recently rather than where optimism is already evident. IT, he says, has come back to reasonable valuations but is not really a growth business at present — more an allocation trade.

Large banks also look reasonable on valuations with some growth visibility and controlled downside risk, said Andrade. Pharmaceuticals, particularly manufacturing-led, are heading toward the bottom of their earnings cycle, hurt recently by a key product going off patent, but he expects industry profitability to be dramatically higher ahead as capacities are in place and patent expiries open opportunities for Indian generics.

Metals, a segment he turned constructive on earlier, have already started to play out, aided by both higher volumes and stronger commodity prices. Automobiles, driven by discretionary spending, continue to see momentum into 2026, although Andrade calls it a mature business where dramatic growth is unlikely. Telecom, he adds, remains supported by cash flows, recent price increases, and improving profitability. Consumption and BFSI have already priced in much of the policy-led optimism seen in the previous quarter, and he sees them more as stock-specific stories than categorywide compounders.

Government spending is likely to come to the forefront in the coming quarter, he adds, even as the market remains trendless for now. For investors wondering how to navigate such an environment, Andrade’s advice remains simple: look at industries that have struggled for a few years, buy them at sensible valuations, and wait.