Mirae Asset Expert Predicts Infrastructure Focus in Upcoming Budget
Varun Goel, Senior Fund Manager at Mirae Asset Investment Managers in India, shares his insights on the financial landscape. In a recent interview, he outlined expectations for Budget 2026 and the stock market's trajectory.
Budget 2026: What to Anticipate
Goel expects the government to maintain its emphasis on infrastructure spending. He foresees additional support for roads, railways, and green energy initiatives. An increase in defence allocations could benefit the defence sector directly.
Any rationalisation of capital gains taxes or securities transaction tax would likely please investors. Such moves could provide a positive jolt to market sentiment.
Equity Market Outlook for 2026
The current fiscal year marks a growth rebound for India. Several factors contribute to this recovery:
- Significant monetary easing by the Reserve Bank of India.
- Reductions in GST and income tax rates.
- Strong agricultural production.
- A robust recovery in central government capital expenditure spending.
These elements have collectively boosted GDP growth. Goel believes this rebound will strengthen further. It should translate into solid corporate earnings performance.
Credit growth is picking up. Corporate earnings are recovering. Infrastructure-led capital expenditure should gain more momentum throughout 2026.
Key Risks for Investors
Geopolitical tensions pose the most significant near-term risk. Trade disruptions, regional conflicts, and energy market instability can create volatility. However, Goel advises looking beyond the headlines.
The underlying Indian growth narrative remains compelling. Long-term prospects appear promising despite short-term fluctuations.
Investment Strategy Recommendations
For medium-term horizons, Goel suggests a diversified equity fund like a flexi-cap fund. These funds adjust exposure across large, mid, and small-cap stocks dynamically. They offer a balance of diversification and growth potential.
From a longer-term perspective, current market volatility creates attractive entry points in the small-cap space. Historical patterns show this segment often rebounds strongly when macro headwinds ease.
Goel anticipates a powerful earnings rebound for small-cap companies over the next four to six quarters.
Sectoral Opportunities and Stock Picks
The focus should be on businesses with clear earnings visibility, strong balance sheets, and scalable models. Over three to five years, such companies can become significant wealth compounders.
Goel highlights several promising areas:
- Consumption Revival: Expect more discretionary spending as consumption picks up.
- Manufacturing: Positive due to the government's Make in India push.
- Domestic Cyclicals: Banking, financial services, insurance (BFSI), auto, and capital goods should perform well.
- Lending Space: Constructive outlook, with small banks, small finance banks, and NBFCs poised for healthy growth from monetary easing.
- Healthcare: Hospitals and diagnostics are shifting from unorganised to organised sectors, offering medium-term compounding. Contract research and manufacturing services present a secular growth opportunity.
The portfolio leans toward domestic recovery stories in BFSI, auto, capital goods, and manufacturing. It remains cautious on export-oriented segments.
Flexi-Cap Fund Inflows: Drivers and Sustainability
Flexi-cap funds attract strong inflows because they serve as a one-stop solution for equity allocation. Their ability to shift across market capitalisations provides adaptability. This flexibility helps manage risk while capturing growth across India's broad market.
The momentum seems sustainable as investors seek balanced options amid uncertain conditions.
Q3 Earnings Assessment
Goel projects 8-10% earnings growth for the third quarter. He expects single-digit growth in heavyweight sectors like banks, IT, and consumption. However, auto, NBFCs, and metals should deliver robust double-digit growth.
This mix leads to a weighted average around 8-10% for the quarter. Earnings recovery should strengthen in subsequent quarters, supporting market optimism.
Note: This analysis presents the expert's views for educational purposes. Investors should consult certified advisors before making decisions, as market conditions change rapidly.
