Daily Voice | FIIs to return in 2026: Helios’ Dinshaw Irani sees domestic consumption sectors outperform

"We have no doubt that FIIs will return in 2026 as the reasons for selling are now reversing," said Dinshaw Irani, MD & CEO at Helios India, in an interview with Moneycontrol.
According to him, the valuations have become reasonable, and the growth rates are back. Even the main reasons - the outcome of the trade deal with the US and a confirmation on growth sustainability - are expected to be addressed by Q1CY26, he said.
Among sectors, he believes the domestic consumption demand-related sectors are the best placed to outperform. Selectively, one can even play the capex and infra theme, which will need to kick in to satisfy the growing domestic demand, he said.
Do you think the incoming Fed Chair is likely to push rates lower more aggressively in 2026?
The existing Chairman of the Federal Reserve, Jerome Powell's term is to end on May 15, 2026. A new Chairman is to be nominated by the POTUS, who has gone on record stating that he will reveal the name at the beginning of 2026. The betting counters in the US are pointing towards Kevin Hassett, his trusted economic advisor, to get nominated.
The Senate will subsequently have to confirm this nomination. The POTUS has already put one of his advisors, Stephen Miran, on the Fed Board temporarily, and he has voted for bumper rate cuts. If Hassett were to become the chair, he too would work in the same direction.
Do you believe earnings growth will pick up selectively next year, or will it be broad-based?
The marked slowdown in earnings growth started from the first quarter of FY25 and continued into the first quarter of FY26. The slowdown was a result of fiscal and monetary tightening undertaken in the previous year to control inflation, and has proved effective in controlling inflation.
However, the fiscal and monetary easing, too, which commenced in the last quarter of CY24, has been very effective in driving up consumption. Thus, we believe that domestic consumption-driven sectors will do potentially far better than export-driven companies.
Most experts believe there are enough reasons for FIIs to re-look at India. If yes, what factors are currently keeping them away from Indian markets, and do you expect them to return in 2026?
The sole reason for FIIs to move money out of the country was high valuations not being supported by adequate growth in earnings. FII exodus started in September last year with the drop in earnings growth, and since then, except for a few months, one has seen only outflows.
However, the reasons for selling are now reversing. The valuations have become reasonable, and the growth rates are back. Ideally, they should have started the buying spree, but we believe the main reasons for them to hold back are the outcome of the trade deal with the US and a confirmation on growth sustainability. Both these factors are expected to be addressed by Q1CY26. We do not doubt that they will return in 2026.
What are the top sectoral themes for next year?
We believe the domestic consumption demand-related sectors are the best placed to outperform. Fortunately, in India, we have a variety of such sectors like Banking, Financial Services and Insurance, Autos and ancillaries, Hospitality, Healthcare, E-Commerce and Quick Commerce, Platform Companies, etc.
Selectively, one can even play the capex and infra theme, which will need to kick in to satisfy the growing domestic demand.
Do you think inflation will not be a major concern in 2026? Do you expect the RBI to deliver a couple of rate cuts next year?
Given the aggressive rate cuts and the huge infusion of liquidity, demand for goods and services is bound to move up. This will certainly result in demand-led inflation at a later date as supplies are not able to keep pace with demand.
We believe that this scenario will play out by the end of CY26, which coincides with a low YoY base. However, that should not stop the RBI from cutting rates well into the first half of CY26 as inflation is expected to remain benign during that time period.
Do you expect demand for precious metals to remain strong even in 2026?
We have been flummoxed by the continued strength in precious metal prices. The erstwhile reasons for the strength, like geopolitical tensions, political and trade uncertainty, rising inflation, etc were well understood. But of late, these factors are easing.
The only thing supporting the rally now is the depreciating USD (against global currencies) and human greed. The former will ease out consequently, while we do not have any answers for the latter.
Do you like the quick-commerce space over the long term? Do you expect consolidation to take place, given that several players are sitting on large war chests?
We don’t like but we love the quick commerce space as this segment, given the underpenetration, is expected to see exponential growth in the near future. New players with deep pockets are bound to test the waters in such exponential growth industries, and consolidation is othe nly way forward, given that there will be failures. Established players are expected to have an inherent advantage, and heavy discounting cannot be the way forward, as it will only ensure an early crash and burn.
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