Khandelwal pointed out that tax collection trends and global trade uncertainty add to the pressure.
“The data show that we are going to have a hard run as we enter into 2026 and we develop into this year. And on top of that, the export businesses are all kind of suffering from what’s happening on the tariff front. A combination of factors, we believe that 2026 will be a hard fought year as far as equities is concerned,” he added.Within financials, Khandelwal continues to favour PSU banks. He highlighted that PSU lenders have improved execution, credit quality and market share over the last 18 months.
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Many large PSU banks are now growing advances faster than the system, while also protecting margins through better fee and distribution income. Stocks like Bank of Baroda and Union Bank of India stand out due to strong loan growth potential and attractive valuations.He also remains positive on State Bank of India, advising long-term investors to stay invested, supported by its diversified businesses and improving profitability.
Another area of interest is small finance banks (SFBs). Khandelwal noted that SFBs have sharply reduced unsecured lending, diversified geographically and expanded into secured products like home and gold loans. This structural shift, along with potential upgrades to universal bank status, could drive strong growth. As he put it, “They will be the strongest growing pack in the entire banking space.”
Beyond banks, Khandelwal sees value in the recycling theme, especially non-ferrous metal recycling. He prefers export-oriented players like Jain Resource Recycling and Pondy Oxides, citing ESG benefits, global demand and strong earnings visibility.
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Also, catch the latest Budget 2026 expectations updates here
