Systematix Group's Nikhil Khandelwal: Stock Picking Is Key; Avoid Overweighting Solar in 2026

According to Nikhil Khandelwal, Chairman & Managing Director at Systematix Group, the market is becoming more about individual stock selection due to tightening valuations and high forward price-to-earnings ratios.

Looking ahead to 2026, Khandelwal suggests focusing on:

• Strong financial institutions and banks poised to gain from credit recovery.
• Capital goods and industrial companies benefiting from increased private capital expenditure.
• Specific export-focused businesses with consistent profit margins.

He cautions against investing heavily in solar companies involved in standard solar value chain activities. He also anticipates a subdued 2026 for sectors heavily reliant on government capital expenditure.

**Market Challenges:**

Khandelwal addressed concerns about the impact of rupee depreciation and delays in trade agreements on the equity market. He acknowledged that the weakening rupee, recently hitting lows of 90.3-90.4 against the dollar due to foreign outflows and trade pressures, is creating headwinds, especially for export-oriented industries.

That said, the reality is a bit more complicated. he noted that strong domestic liquidity is providing a counterbalance. He cited monetary easing and consistent SIP inflows as factors supporting financial stability and market breadth.

Khandelwal suggests that if earnings stabilize and domestic liquidity remains robust, the market could still perform surprisingly well in 2026. That said, the reality is a bit more complicated. he also warns that currency volatility and external flow risks could limit potential gains.