Indian Market Set for 2026 Shift? Fund Guru Reveals Crucial Patience Needed Before Big Growth Surge!

Indian Equities Face Time Correction Until Early 2026, Growth Recovery Expected Later, Says Fund Manager

Kenneth Andrade, CIO of Old Bridge Mutual Fund, anticipates that the current phase of time correction in Indian equities will persist into the early part of 2026. He advises investors to exercise patience during this period, expecting corporate India's growth to rebound significantly in the second half of 2026 and into 2027. The fund is strategically positioned towards themes linked to currency, domestic consumption, and companies building global franchises, with a strong emphasis on valuation and capex-led growth.

Market Outlook: Patience Required Until 2026

• Kenneth Andrade, leading the Old Bridge Mutual Fund (managing ₹1,953 crore as of September 30, 2025), suggests that the current phase of time correction in Indian equities is likely to persist into early 2026.
• He advises investors to maintain patience, stating, "You’ll have to have a little bit of patience into 2026."
• While the market breadth might remain weak in the first quarter of next year, Andrade foresees a robust recovery in corporate India's growth prospects.
• "We should be much better in the second half of 2026 and 2027," he projected.

Key Investment Themes

• The Old Bridge Mutual Fund is aligning its portfolio with themes closely tied to currency movements, domestic consumption patterns, and companies that are successfully establishing global franchises.
• Andrade highlighted "valuations" and "capex-led growth" as the primary thematics guiding their financial standpoint.

Sectoral Opportunities

• The fund sees significant potential in sectors where capital expenditure (capex) is either already underway or nearing completion.
• Pharmaceuticals and Automotive are identified as key sectors benefiting from this trend.
• Metals are also expected to perform well, driven by new capacity additions and increasing volumes over the next one to two years.

Real Estate and Commodities

• Andrade noted a shift in the real estate market from focusing on price growth to sales growth, describing the current phase as one of "consolidation."
• The fund currently holds approximately 12% exposure to the commodities sector, including both ferrous and non-ferrous players.
• The strategy here involves identifying companies that are intelligently deploying capital, expecting returns to improve as new capacities ramp up.

Consumer-Tech and IT Services

• While acknowledging the performance of consumer-tech and payments-tech listings, Andrade stated they do not yet align with the fund's core investment approach, which prefers companies demonstrating growth through internal cash flows.
• He believes valuations need to correct, or earnings must grow faster, for these businesses to become more attractive.
• Old Bridge continues to hold about 10% in legacy IT services, expecting support from cash flow generation and advancements in automation and Artificial Intelligence (AI).
• However, Andrade cautioned that only select IT companies are likely to benefit from AI advancements, not the entire sector.

Preference for Global Exposure

• The fund continues to favour companies with a substantial overseas presence.
• "Any business that has got a reasonably large dollar exposure... is what we like," Andrade stated.
• He emphasized the need for Indian companies to build global franchises to sustain meaningful market growth and elevate India's economic scale.

Impact

• This outlook suggests that investors may need to adjust their expectations for short-term market gains, focusing instead on long-term growth potential and patience.
• Sectors with strong capex pipelines, domestic demand drivers, and global reach are likely to be favoured.
• The emphasis on dollar exposure could benefit companies involved in international trade or services.
• Impact Rating: 7/10

Difficult Terms Explained

• Time Correction: A market condition where asset prices trade sideways or consolidate within a range for an extended period, rather than experiencing a sharp decline or surge. It allows underlying fundamentals to catch up with valuations.
• Consolidation Phase: A period in the market where prices move within a relatively narrow range, indicating a balance between buying and selling pressure, often preceding a significant price move.
• Breadth of the Market: Refers to the extent to which stock price advances or declines are widespread across the market. Strong breadth means many stocks are participating in a rally; weak breadth means only a few large stocks are driving the market.
• Capex (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets like property, buildings, technology, or equipment.
• Global Franchises: Businesses that have established a strong brand presence, operational model, and customer base across multiple countries.
• Internal Cash Flows: The cash generated by a company's normal business operations after accounting for operating expenses.
• Automation: The use of technology to perform tasks previously done by humans.
• AI (Artificial Intelligence): The simulation of human intelligence processes by machines, especially computer systems, including learning, problem-solving, and decision-making.