'Selective Aggression': D-Street Expert's Bold Strategy For Creating Alpha Returns In 2026

The Indian stock market entered 2026 amid heightened geopolitical risk and continued sell off by foreign investors. According to analysts, the biggest trigger for 2026 will be the India-US trade deal and its impact on the economy. However, D-Street is poised for a steady run supported by India's strong macroeconomic fundamentals and domestic fund flow.

In the current market scenario, Aniruddha Sarkar, Co-Founder, Equinova Investment Managers said in an exclusive interview with NDTV Profit on Jan. 8, that Indian equities will outperform global markets in 2026. Sarkar also believes that the theme for investors for the year is 'selective aggression'

According to the market expert's view for the year, investors should adopt 'selective aggression' in terms of choosing sectors and stocks for 2026. "Selective aggression is required. Ideally, one should have 25 stocks in the portfolio which takes care of concentration and diversification,'' said Sarkar.

Investors should bet more on those names where the conviction is high, according to the expert. ''So, the top 10 stocks in your portfolio can make up 45-50% and the remaining 15-18 stocks can take care of the rest,'' he said. Discussing his strategy, Sarkar said that the top 10 stocks make up 52% of his portfolio.

''Sector selection is very important and the stock picks. One might buy an excellent company but if that sector does not have upside of an overall earnings upcycle, then it's of no use. So it's much easier to pick the right sector,'' he explained.

The D-Street expert's top sectoral pick for 2026 is industrials and capex. ''It is a big theme which will play out and has been my top bet for the last eight quarters. Industrials and capex will see higher earnings momentum,'' he said.

Sarkar said he is getting overweight on banks and NBFCs. His third sector pick is urban and rural consumption. "These three sectors make up 90% of my portfolio," he said. The expert claims he has been underweight on IT.

"I didn't have a single IT stock for 6-9 months. Betting against the index helped. I'm bullish on mid-and smallcap IT stocks. Many of these firms have reporting management changes which leads to good earnings upcycle," said Sarkar.

Sarkar believes that the market expectation for 2026 is a 12-15% return on investments. "I always link return expectations to earnings upside," he said. For the largecap index, a 14-16% earnings growth for the year is the broader consensus of the market, according to the expert.

"Overall, a 4-5% alpha over earnings growth one can expect in 2026 if the portfolio has selectively picked the right sector and companies," he added.

Coming to sectors which have generated good returns, Sarkar said he is betting on auto and auto ancillaries as ''all numbers giving a picture that it is not a pent-up demand''. He notes that the benefit of GST tax cuts will go to the two-wheeler segments.

"I'm playing the commercial vehicle space with auto ancilliaries and the OEMs with passenger vehicles and two wheelers,'' said Sarkar. According to him, the defence sector is a multi-year theme. "We're selectively looking at private companies also as many PSU names now have high valuations," he concluded.