Indian Markets Still 'Very Hot', Cherry-Picking Key For 2026, Says Porinju Veliyath

Indian equities remain “very hot and will continue to be hot,” says Porinju Veliyath, Founder and CEO of Equity Intelligence, who believes the long-term India story remains firmly intact despite a year of turbulence for the broader market.

Speaking to NDTV Profit about the current market conditions, Veliyath noted that valuations in several pockets have cooled meaningfully after the corrections seen through 2025, creating opportunities for investors who are willing to be selective.

Veliyath stressed that while markets remain elevated, investors must exercise caution, especially with momentum-driven stocks trading at steep multiples of 50–200 times earnings. He warned that only about 10% of such companies are likely to generate meaningful wealth from here, while the remaining 90% may undergo either price correction or prolonged time correction.

Veliyath described 2025 as a difficult year for the broader market despite the headline indices touching record highs. He characterised the past year as a “bear market” for boarder market, even as the Nifty held firm due to aggressive domestic inflows and concentrated buying in large-caps by mutual funds and institutional investors.

The underperformance stretched across five to six quarters, he said, but the correction has now brought valuations closer to fair levels. This creates hope for a reversal, as several fundamentally strong companies are trading at attractive levels simply because the market ignored them during the correction cycle.

Looking ahead to 2026, Veliyath expects “cherry picking” to outperform broad exposure, with multiple stocks capable of rising 50%–100% if chosen carefully.

However, he does not expect the Nifty itself to post sharp gains, estimating only a modest 5% to10% upside next year. He encouraged investors to stay anchored to long-term India optimism, calling it “very rational” and backed by decades of economic progress and wealth creation.

Veliyath maintains that both small-caps and mid-caps continue to hold substantial potential. Reflecting on his own investment history, he noted that many of the biggest wealth creators started as small companies before growing 20–30 times and eventually becoming large-caps. He believes alpha generation remains possible by sticking to fundamental investing principles rather than chasing themes or narratives.

He also dismissed concerns over the dollar–rupee exchange rate, recalling how the currency has depreciated steadily over decades without causing material long-term damage to the equity outlook. He argued that India's structural positives – from strong domestic liquidity to policy reforms and improving growth fundamentals – matter far more for market direction.