The is inching closer to the 26,000 mark, but breaking past its all-time high remains elusive. With earnings growth still modest and valuations hovering in a cautious zone, the market appears to be in a holding pattern, awaiting stronger momentum, says Chakri Lokapriya, Chief Investment Officer, LGT Wealth India.
In this interview, we explore the key trends shaping — from sectoral leaders and laggards to emerging opportunities in IT, financials, and gold — and what investors should watch over the next 12–18 months. Edited excerpts:
Nifty 50 has neared the 26,000 mark. But somehow the index is unable to cross the all-time high mark. What explains this?
Despite approaching its all-time high, the Nifty 50 has struggled to break past the 26,000 mark. The primary reason? remains muted. In 2Q2026, earnings grew by approximately 8–9%, indicating that the slowdown is easing — but not reversing. With valuations hovering between 20x and 21x forward earnings, the market is in a holding pattern, waiting for earnings momentum to return.
Earnings recovery is the much-talked-about subject in markets currently. Why do you feel it’s behind the trend?
The 2Q26 earnings season delivered results that were mostly in line with subdued expectations:
1. Leaders: Metals and Financials helped support overall earnings.
2. Lagging: Infrastructure reflects uncertainty, particularly tied to US-India trade dynamics.
3. Market Performance:
1. Nifty 50: +8–9% earnings growth
2. Broader market: +9–10%
3. Small caps: -5% to -7%Over one-third of the broader market missed EPS expectations, with the rest meeting them — but just barely.
IT sector is showing signs of green shoots after a prolonged selloff. Do you see a case for investing in the sector?
India’s major IT firms are cautiously optimistic again. After several quarters of guidance cuts, top-line growth expectations have been revised up to 2–5%, boosted by the rupee’s depreciation (25–30 bps tailwind).
What’s changing are three things:
1. More deal flows are emerging, but a confirmed uptrend hinges on a resolution of the U.S.-India tariff issue.
2. Big players (TCS, Infosys, HCL Tech) are positioned to benefit from corporate AI spending.
3. But for now, AI spending isn’t large enough to drive a major earnings cycle for the Indian IT sector.
Gen AI Evolution:
1. 2022–23: Focus on answering questions
2. 2024–25: Generating insights
3. 2025–26: Showing some reasoning. Even with progress, AI’s impact on enterprise IT budgets — the bread and butter of Indian IT — remains modest.
We are seeing strong inflows in gold ETFs in the past three months’ AMFI data. Is gold more than a safe-haven now?
Gold has regained prominence as a strategic asset. Not just driven by market uncertainty, but also by structural factors. Central banks are accumulating gold due to geopolitical risks and frozen foreign exchange reserves (e.g., Russia following the Ukraine invasion). Supply constraints remain versus rising demand, which supports gold’s role in diversified portfolios.
What are some of the best stocks or sectoral opportunities for investors over next 12-18 months?
The macro backdrop signals that economic support from GST cuts and credit easing is fading. While the inflation is at record lows (~0.25%), the RBI is holding rates steady. Growth revisions are positive, but they are contingent on tariff deals and global trade stability.
Against this backdrop, financial services are likely to be the first to benefit from any economic revival. As growth picks up, credit demand and capital flows typically lead the way.
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