D-Street Expert's 'Selective Aggression' Strategy Targets Alpha Returns in 2026
Quest Investment Advisors' CIO Aniruddha Sarkar advocates 'selective aggression' strategy for 2026, recommending 25-stock portfolios with top 10 positions comprising 45-50% allocation. His sectoral focus targets industrials/capex, banking/NBFCs, and consumption sectors representing 90% of portfolio. Sarkar expects 12-15% market returns with 4-5% alpha potential through selective positioning, while highlighting opportunities in auto ancillaries and defense sector companies.
*this image is generated using AI for illustrative purposes only.
Aniruddha Sarkar, Chief Investment Officer and Portfolio Manager at Quest Investment Advisors, has outlined a distinctive investment approach for 2026, advocating what he terms 'selective aggression' to generate alpha returns in the current market environment. Speaking in an exclusive interview to NDTV Profit on January 8, Sarkar expressed confidence that Indian equities will outperform global markets this year, despite ongoing geopolitical risks and foreign investor selling pressure.
Portfolio Construction Strategy
Sarkar's investment philosophy centers on concentrated portfolio construction with strategic diversification. He recommends maintaining exactly 25 stocks in a portfolio to balance concentration with risk management. The strategy involves significant weighting toward high-conviction positions, with the top 10 stocks comprising 45-50% of total allocation, while the remaining 15-18 stocks account for the balance.
| Portfolio Structure: | Allocation |
|---|---|
| Top 10 stocks: | 45-50% |
| Remaining 15 stocks: | 50-55% |
| Total positions: | 25 stocks |
| Sarkar's top 10 allocation: | 52% |
The investment expert emphasizes that sector selection takes precedence over individual stock picking. "One might buy an excellent company but if that sector does not have upside of an overall earnings upcycle, then it's of no use. So it's much easier to pick the right sector," Sarkar explained.
Primary Sectoral Allocations
Sarkar has identified three core sectors that constitute 90% of his portfolio allocation. His primary focus remains on industrials and capex, a theme he has maintained as his top bet for the last eight quarters. The expert anticipates higher earnings momentum in this segment throughout 2026.
| Sector Focus: | Strategy |
|---|---|
| Industrials & Capex: | Primary pick, 8-quarter conviction |
| Banking & NBFCs: | Increasing overweight position |
| Urban & Rural Consumption: | Third major allocation |
| Combined allocation: | 90% of portfolio |
Regarding the IT sector, Sarkar has maintained an underweight position, having held no IT stocks for 6-9 months. However, he now shows bullish sentiment toward mid and smallcap IT companies, particularly those experiencing management changes that could drive earnings cycles.
Return Expectations and Alpha Generation
The market expert links his return expectations directly to earnings growth potential. For 2026, Sarkar anticipates market returns of 12-15%, based on largecap index earnings growth consensus of 14-16%. He believes investors can achieve 4-5% alpha over earnings growth through selective sector and company selection.
| Return Framework: | Projection |
|---|---|
| Expected market returns: | 12-15% |
| Largecap earnings growth: | 14-16% |
| Potential alpha generation: | 4-5% over earnings |
Specific Investment Opportunities
Sarkar has identified several specific opportunities within his preferred sectors. In the automotive space, he is betting significantly on auto and auto ancillaries, noting that current numbers suggest demand is not merely pent-up. The expert expects two-wheeler segments to benefit from GST tax cuts, while focusing on commercial vehicle space through auto ancillaries and OEMs in passenger vehicles and two-wheelers.
The defense sector represents a multi-year investment theme for Sarkar, though he emphasizes selective focus on private companies due to high valuations in many PSU names. This approach reflects his broader philosophy of selective aggression, where conviction-based positioning in carefully chosen sectors and stocks drives portfolio performance.
Sarkar's strategy positions Indian equities for outperformance in 2026, supported by strong domestic macroeconomic fundamentals and continued domestic fund flows, despite ongoing challenges from geopolitical tensions and foreign investor sentiment.
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