Gaurav Bhandari's 2026 Market Playbook: Caution on Gold, Optimism on PSU Banks and Defence

As markets navigate 2026 amid global uncertainties and shifting capital flows, investment strategies require careful recalibration. Gaurav Bhandari, CEO of Monarch Networth Capital, offers his strategic market outlook, emphasizing selective opportunities while highlighting areas of caution in the current investment landscape.

December Quarter Earnings Outlook

Bhandari expects the December quarter earnings to deliver decent but not spectacular results. His projections indicate moderate growth across key market segments.

While certain pockets like banks and select industrials may demonstrate resilience, the overall earnings growth trajectory remains measured for the quarter.

Precious Metals Strategy: Exercise Caution

Despite gold and silver's strong performance, Bhandari advises a cautious approach to precious metals investments. He characterizes these assets as increasingly speculative, with price movements driven more by geopolitical tensions, central bank actions, and investor sentiment rather than intrinsic fundamentals. At current levels, the risk-reward profile does not appear favorable, suggesting investors should use precious metals primarily as a hedge or tactical allocation rather than aggressive positioning based on recent momentum.

Budget 2026 Expectations and FII Focus

Bhandari anticipates a strong reform-oriented Budget 2026, with particular emphasis on measures to improve investor sentiment. The government is likely to focus on taxation relief or clarity for Foreign Institutional Investors (FIIs), addressing sustained outflows over the past 3-4 years. These initiatives aim to arrest capital flight and enhance India's attractiveness as an investment destination.

SIP Inflows: Market Stabilization Factor

Domestic SIP flows continue to serve as a key stabilizing force for Indian equities, with this trend expected to persist through 2026. Several factors support robust SIP inflows:

• Financialization of household savings
• Rising investor awareness
• Long-term wealth creation themes
• Consistent cushion against foreign selling

Currency Outlook and Economic Projections

Contrary to concerns about further rupee depreciation, Bhandari does not foresee the currency weakening to 100 per USD. He expects the rupee to strengthen towards 87.00 levels within the next 45-60 days, supported by government and RBI corrective measures focused on boosting exports and managing currency volatility.

Sectoral Preferences for 2026

Bhandari maintains positive outlook on specific sectors that offer compelling investment opportunities:

PSU Banks: Supported by improving balance sheets, better asset quality, and attractive valuations, PSU banks remain a preferred sector for medium-to-long-term portfolios.

Defence Sector: Strong order books, indigenization initiatives, and sustained government spending provide robust fundamentals for defence investments.

Investors can consider increasing weightage in these sectors for their medium-to-long-term investment strategies.

Growth Resilience Amid Global Challenges

Despite geopolitical concerns and trade tensions serving as headwinds, Bhandari projects Indian economic growth in the range of 7.40-7.60% for the current financial year. Domestic consumption remains the backbone of Indian growth, while structural strengths, demographic advantages, and policy continuity provide confidence in sustaining growth momentum despite global uncertainties.