Indian Market Outlook: Banking Strength Offsets IT Drag, Says Nischal Maheshwari

Synopsis Indian markets open cautiously amid mixed earnings, with banking strength offsetting IT weakness. Market expert Nischal Maheshwari sees improving outlook for banks, near-term momentum in PSU and smaller lenders, continued but cautious optimism on metals, steady real estate demand, and growing opportunities in NBFCs and select infrastructure stocks despite valuation concerns. Indian equities are set for a cautious start to the week amid mixed earnings trends, with strength in banking offsetting continued pressure on IT stocks, according to market expert Nischal Maheshwari. Speaking to ET Now, Maheshwari said the near-term market direction is being driven more by sector-specific earnings and valuations than any broad-based structural weakness. IT muted, banks provide stability Maheshwari noted that IT results have largely met or fallen short of expectations, with limited visibility on demand recovery. “There is no clear positive outlook coming from IT earnings declared so far,” he said. In contrast, banking results have been stronger, barring one-time provisions related to priority sector lending (PSL) norms at large private lenders. According to him, core banking performance remains healthy, with improving net interest margins (NIMs) and clear guidance on growth over the next few quarters. Valuations for large private banks appear attractive, as many frontline names have delivered muted stock returns over the past 12–18 months. Smaller banks, PSU lenders may outperform near term Maheshwari believes smaller private banks are currently benefiting from momentum and favourable valuations, allowing them to outperform larger peers in the short term. Within banking, he expects PSU banks to lead initially over the next couple of quarters, followed by a catch-up in large private sector lenders as earnings visibility improves. Metals rally to continue, but with caution On metals, Maheshwari said prices have seen a sharp rally over the past quarter and could continue rising in the near term. However, he cautioned that the rally appears partly driven by financial flows into hard assets amid geopolitical uncertainty and reduced confidence in the dollar, rather than a strong revival in physical demand. China’s manufacturing recovery remains a key variable to watch. Live Events You Might Also Like: Fintech-powered NBFCs beat PSU banks on growth despite lower valuations, says Deven Choksey Real estate demand strong despite valuation concerns The real estate sector continues to show robust on-ground demand, especially in major markets such as Mumbai, Bengaluru and Delhi NCR. Strong order bookings and deliveries support the sector’s fundamentals, though elevated valuations have led to stock-level corrections and consolidation. NBFCs and select infra stocks in spotlight Maheshwari remains constructive on NBFCs, citing easing funding costs and benign credit conditions. He expects performance to broaden beyond gold-focused lenders this year. In infrastructure, select capital goods and power equipment players look attractive after sharp corrections, particularly those gaining traction in data centre and export-linked opportunities. 2026 themes: banks and metals Looking ahead to 2026, Maheshwari sees banking as a well-established growth theme, while metals could continue to surprise on the upside as global investors increase allocation to real assets amid persistent geopolitical risks. Overall, the market expert expects sector rotation to continue, with investors favouring value, earnings visibility and balance-sheet strength over high-growth but uncertain segments. You Might Also Like: Banks and NBFCs among 7 key investment themes for 2026: DSP Mutual Fund (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. 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