Vikas Khemani sees broad-based rally to gasoline markets; bets on financials, pharma

With Indian fairness markets displaying indicators of resilience, traders are intently watching which sectors might gasoline a contemporary excessive this yr. Vikas Khemani, a seasoned market strategist, believes the rally could possibly be broad-based reasonably than led by a single sector.

“Financials can lead, however different sectors have the potential to carry out equally nicely. Manufacturing and pharma, as an example, stay robust. Even inside banking, there may be scope for continued progress,” Khemani informed ET Now. “The encouraging half of the present market is widespread participation. If one sector slows down quickly, one other catches up, which makes the rally very attention-grabbing.”

Khemani additionally highlighted the function of large-cap and mid- and small-cap shares. “When sentiment turns detrimental, massive caps have a tendency to carry up higher. When risk-on sentiment returns, mid- and small-caps sometimes outperform. At present, pessimism is excessive, money is sitting on the sidelines, and shorts are plentiful. If tariff points get resolved within the subsequent three to 6 months, we might see robust short-covering and renewed shopping for,” he mentioned.

On earnings, Khemani is optimistic. “Regardless of the narrative of company slowdown, final yr’s earnings had been impacted primarily by liquidity points and diminished authorities spending. These elements have reversed now, and measures like GST fee cuts and liquidity infusion can increase earnings. On a 2025–26 foundation, general earnings might develop round 13–14%, with some sectors outperforming.”

The IT sector, Khemani famous, has been consolidating attributable to ongoing expertise transformations. “Massive-cap IT might solely generate single-digit to early teen returns sustainably. Nonetheless, mid- and small-cap IT corporations, particularly these in SaaS, ER&D, and product-oriented segments, supply higher progress potential. Every market cycle brings new corporations into prominence, like Persistent, which scaled considerably over the previous decade. Figuring out these pockets early is vital.”

Khemani concluded that the present market setup—with broad participation, enhancing earnings, and manageable macro overhangs—favors traders positioned for upside reasonably than draw back.