Manish Sonthalia, Chief Investment Officer at Emkay Investment Managers, which manages funds worth ₹1,012.15 crore as of November 2025, has outlined three key investment themes for 2026, led by premium discretionary consumption, capital markets, and rate-sensitive sectors.
Sonthalia said the firm is focusing on the premium end of discretionary consumption, where brand relevance remains strong in select categories. He noted that brand salience is largely intact in automobiles, jewellery, and real estate, while it is weakening in several other consumer segments. "Premium discretionary is where our focus is," he said.
The second theme is capital markets, which Sonthalia described as continuing to remain relevant into next year. He also highlighted rate-sensitive sectors as a key area, led by automobiles and supported by banks, insurance, and real estate. "Capital markets look entrenched even going into next year," he said, adding that other rate-sensitive segments are also expected to participate.
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On the broader market outlook, Sonthalia said the sluggish phase seen in 2025 may be easing. He pointed to improving macro conditions, earnings visibility, and valuations as factors supporting equities. He flagged the rupee as a key variable, noting that its recent weakness may be excessive. The rupee at 91, he said, looks "overdone".
On earnings, Sonthalia expects modest growth in the third quarter, with revenue growth of around 9% and slightly lower profit growth. He sees a stronger picture emerging in the fiscal year 2026-27 (FY27), with earnings growth of about 13-14%, supported by government spending.
Addressing valuation concerns, Sonthalia said the market is not as expensive as it appears. He noted that the Nifty 50 is trading at about 21-22 times earnings, assuming 11-12% earnings growth, with a PEG ratio below two. He extended this view to small-cap stocks, saying they are trading close to their three- and five-year median valuations, with earnings growth projected at 14-15%.
On market sentiment, Sonthalia said low volatility reflects "total complacency," with neither buyers nor sellers taking aggressive positions. He said this could lead to a sharp move once a trigger emerges, pointing to a potential trade deal in the next three months as one event markets are tracking. Overall, he said "positives way more than the negatives".
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Sonthalia said Emkay owns VIP Industries and remains positive on the luggage space. He said the industry is largely controlled by three players - VIP, Safari Industries, and Samsonite India. He said VIP lost market share earlier due to a delayed shift online but is now correcting past strategies. He added that the category benefits from rising travel and faster replacement cycles, and that building scale in this segment remains difficult for unbranded players.
On financials, Sonthalia said Emkay owns Shriram Finance, citing a wide valuation gap versus peers such as Cholamandalam Investment and Finance. He said a ₹40,000 crore capital infusion could lower funding costs and support a rating upgrade, improving growth visibility.
Discussing new-age companies, Sonthalia said the firm owns Pine Labs and Groww. He said Groww could deliver 35-40% profit growth over the next two years, driven by operating leverage and growth in subscriptions and trading activity across BSE and NSE. On Pine Labs, he said it is linked to consumption growth and margin expansion, and is trading at a discount to peers such as Zaggle and Paytm.
On the EMS space, Sonthalia urged caution. He said valuations already factor in future growth, while margins remain sensitive to rupee depreciation due to high imported input costs. He added that while volumes and policy support remain visible, currency-linked margin pressure is the key risk to track.
For the full interview, watch the accompanying video
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