Nifty Could End 2026 at a Record High, Wealth Adviser Says

He said second-quarter earnings were largely in line with expectations, with a few positive surprises. In his view, listed companies are holding up because tax and GST compliance systems are better integrated, income-tax refunds are faster and foreign exchange management has improved under rules from the Reserve Bank of India (RBI).

Companies have also cut costs and used technology to lift productivity, he said. Microcaps, the smallest listed firms, have done relatively well because they carry less debt and are less exposed to global tensions.

A broader rally

"Yes, we expect the rally to broaden," Banerjee said when asked about the market's direction. He argued that foreign money pushing up large-cap and higher-quality stocks will send domestic investors looking for value in smaller, lesser-known companies.

He also said rising tax buoyancy could create room for tax rationalization. The interview text available ends before he finishes that point.

Oil, inflation and the central bank

Banerjee believes oil prices have peaked because global supplies have been rerouted. He expects India's landed crude prices to settle between $80 and $90 a barrel for the foreseeable future.

Risks remain. He listed inflation from higher oil prices, volatile foreign inflows, lower farm output and disrupted fertilizer shipments along traditional trade routes. For the second half of the fiscal year to improve significantly, he said, geopolitical tensions would need to ease alongside clearer policy in India and abroad.

He sees the possibility of another RBI rate hike in December. He remains selective but broadly bearish on IT services, and he favors power and manufacturing companies that can make better use of existing assets.

Banerjee said he is as bullish on the second half of FY27 as he was on the first. His firm's Trilithon Hidden Gems Scheme is fully invested without significant cash, he said.