Nifty Set to Hit New Record High by FY26-End: Pranab Uniyal’s Strategic Insights
Pranab Uniyal, Head of HDFC Tru, forecasts a robust Indian stock market with Nifty likely to reach a new record high by the end of FY26. He emphasizes the potential of large caps and domestic-facing sectors like BFSI, autos, and consumer discretionary.
Indian Stock MarketNiftyBfsiReal EstateMidcapReal Estate NewsAug 31, 2025
In the last 6-9 months, Uniyal has advised clients to shift their investments from mid and small caps to large caps due to valuation concerns. He also recommends focusing on domestic economy-facing sectors such as BFSI, infrastructure, insurance, and capital markets, while being underweight on IT and staples. This strategy has proven beneficial for clients. Overall, the bias towards domestic economy-facing sectors remains, and they are beginning to see opportunities in the mid and small cap space.
Policies over the past 12 months, including income tax cuts, rate cuts, and GST rationalization, are expected to boost growth over an extended period. The Pay Commission could also be a significant theme in CY26.
Despite the Sensex and Nifty failing to outperform bank FDs in the last year, Uniyal emphasizes that market returns are inherently lumpy and not linear. He cautions against trying to time the market, as it can be costly in the long term. While expensive valuations and low earnings growth were concerns in FY25, he currently sees the markets as fairly valued and expects the Nifty to rise by 10%, with a strong probability of hitting a new high by the end of the fiscal year.
FII selling has put pressure on Indian equities, and the Q1 earnings season did little to change investor sentiment. However, DIIs have been net buyers in 6 out of the 8 months in CY2025, with purchases exceeding Rs. 60,000 crore. DII buying has far outstripped FII selling. Uniyal believes that the growth outlook will improve, as earnings in heavy-weight sectors like BFSI, IT, and consumption have almost bottomed out and should improve from H2FY26. HDFC Securities projects earnings growth for FY26E and FY27E at 11.7% and 16.4%, respectively.
Uniyal’s preferred sectors for the next leg of market growth include large banks, auto, consumer discretionary, real estate, cement, and capital goods. These sectors are expected to see strong earnings growth due to strong domestic fundamentals. They remain underweight on oil & gas, mid-cap IT, small banks, and metals.
High-net-worth individuals (HNIs) are showing interest in newer assets like REITs and InvITs to earn high yields in a declining interest rate environment. Uniyal is positive on both asset classes, noting that REITs offer distribution yields of around 6%, and InvITs offer yields of 9-11%. These yields make a strong case for allocation to these asset classes and provide downside protection to total returns. However, investors should be aware of the volatility in unit prices of InvITs and REITs and adopt a contrarian approach.
For a moderate risk-profile investor, Uniyal recommends a 50% equity allocation with 45% in debt. Gold and silver, which have rallied sharply in 2025, should be at 5% of the portfolio, but this allocation could increase to 10% over the next 2-3 years. For an aggressive investor, equity allocation could be 65-70%.
Uniyal’s contrarian idea for the next 12 months is to continue favoring large cap stocks over mid and small caps. While the bias towards small caps is strong, he believes that large caps remain a sound investment. He also remains positive on the infrastructure and real estate sectors, which could see a rebound. Investors could selectively bet on high-quality small and mid-cap ideas where valuations have become attractive.
Frequently Asked Questions
What is Pranab Uniyal's forecast for the Nifty by the end of FY26?
Pranab Uniyal, Head of HDFC Tru, expects the Nifty to hit a new record high by the end of FY26, with a potential rise of 10%.
Which sectors does Pranab Uniyal recommend for investment?
Pranab Uniyal recommends focusing on large banks, auto, consumer discretionary, real estate, cement, and capital goods. He remains underweight on oil & gas, mid-cap IT, small banks, and metals.
What is the recommended asset allocation for a moderate risk-profile investor?
For a moderate risk-profile investor, Pranab Uniyal recommends a 50% equity allocation with 45% in debt and 5% in gold and silver, which could increase to 10% over the next 2-3 years.
What is the outlook for REITs and InvITs?
Pranab Uniyal is positive on both REITs and InvITs, noting that they offer high distribution yields and provide downside protection to total returns. However, investors should be aware of the volatility in unit prices.
What is Pranab Uniyal's contrarian investment idea for the next 12 months?
Pranab Uniyal's contrarian idea is to continue favoring large cap stocks over mid and small caps, despite the strong bias towards small caps. He also remains positive on the infrastructure and real estate sectors, which could see a rebound.
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