Fund Managers Cautiously Optimistic for 2026; Stock Selection Key to Returns

• Fund managers are cautiously optimistic for 2026, citing improving domestic macros but elevated valuations and global uncertainties.
• Recovery is expected to be gradual, more visible in the second half, driven by domestic levers like tax cuts and RBI rate cuts.
• Bottom-up stock selection will be crucial, with financials showing strong consensus due to improving credit cycles.
• Power and healthcare sectors have strong structural tailwinds; IT views remain cautious due to global economic links.
• Global risks, trade uncertainties, and the Union Budget are key factors to watch for market direction.

Why It Matters: Cautious optimism for 2026 market returns, with stock selection and domestic policy driving recovery.