After a year dominated by gold and metals, Indian equities—especially small and midcaps—could be poised for a comeback in 2026, according to Dipan Mehta, Director at Elixir Equities.
Speaking to ET Now, Mehta said 2025 was a reminder that no asset class leads forever. “If you had asked me a year ago, I would have said equities all the way. But 2025 belonged to gold. Hardly anyone predicted the kind of rally precious metals delivered,” he noted.
While the success of multi-asset strategies in 2025 is evident, Mehta believes 2026 could mark a rotation back into equities, particularly segments that have lagged for years. “Small- and midcaps have been in the wilderness for two to three years. Earnings have caught up and valuations are far more reasonable now,” he said.
On the sharp rally in copper stocks such as Hindustan Copper, Mehta acknowledged strong tailwinds from electrification, power distribution investments, and rupee depreciation. “Copper demand is set to grow structurally, but Hindustan Copper looks expensive even by metals standards,” he cautioned, pointing to volatility in copper prices and limited visibility on capacity expansion.
Among metals stocks, Mehta highlighted Vedanta as a better long-term opportunity. He said the proposed demerger could help resolve concerns around holding-company debt. “Once the split happens, the debt overhang should ease. The core businesses—zinc and aluminium—have strong growth dynamics, and the group is among the lowest-cost producers globally,” he said.
Mehta also remains constructive on Adani Ports, citing operating leverage and long-term trade potential. “Ports are a great business. Costs are largely fixed, and as volumes scale up across acquired assets, there is meaningful scope for earnings improvement,” he said, adding that valuations remain reasonable despite global trade challenges.
On Coal India, Mehta was cautious. Despite low valuations and a high dividend yield, he said volume growth has disappointed. “Coal India can see trading rallies if coal prices move up, but I don’t see it as a long-term wealth creator,” he said.
Mehta is firmly bullish on automobiles, particularly commercial vehicles (CVs). “November CV numbers were very strong,” he said, naming Ashok Leyland as his top CV pick due to execution strength, EV bus exposure, and improving market share.
For passenger and premium segments, Mehta prefers Mahindra & Mahindra, Eicher Motors, and TVS Motor. “TVS stands out for consistency, technology leadership, and ability to perform across cycles,” he said.
In financials, Mehta reiterated his preference for diversified, multi-product lenders. He remains invested in Cholamandalam Investment and Finance, citing superior risk management and recovery systems. “Growth has slowed a bit, but this is a conservative lender with a strong track record,” he said.
He added that investors should favour companies such as Bajaj Finance and L&T Finance over single-product lenders, while noting that gold loan companies could perform well from a trading perspective in the near term.
Overall, Mehta believes 2026 could see equities regain relevance after a metals-led year, with stock selection and sector rotation playing a critical role. “Every asset class has its moment. The key is to stay invested where earnings visibility and valuations align,” he said.