Raamdeo Agrawal Eyes Auto Sector as 2026 Market Star
Overview
Veteran investor Raamdeo Agrawal predicts the auto sector will dominate markets in 2026, recommending auto ETFs. His optimism stems from expected 20% earnings growth, supportive government policies, improving consumer sentiment, and easier financing conditions. Agrawal also favors PSU banks for their attractive valuations and strong earnings, and large-cap stocks over mid and small caps in the current economic climate.
Veteran investor Raamdeo Agrawal has declared the auto sector will be the standout performer in 2026. He advised investors to buy auto ETFs, signaling a potential shift in market leadership.
Auto Sector Primed for 2026 Dominance
Agrawal's optimism is rooted in a projected turnaround for earnings momentum. Motilal Oswal's coverage anticipates aggregate earnings growth reaching approximately 20%. He sees a strong environment for cyclical sectors, supported by government policies including monetary easing, tax relief, and GST rationalization. Improving consumer sentiment, easier financing, and a general pickup in economic activity are expected to benefit the auto industry significantly.
PSU Banks and Large Caps in Focus
Beyond autos, Agrawal remains positive on Public Sector Undertaking (PSU) led themes, specifically PSU banks. These institutions are attractive due to their valuations and earnings growth that surpasses private sector peers. He believes large-cap stocks are better positioned than mid and small caps in the present market phase, citing PSU banks' reasonable valuation and nearly double the earnings growth of their private counterparts.
Navigating Global Uncertainty
Agrawal expressed minimal concern regarding global macro factors like geopolitics and trade disruptions. He believes that despite international interdependencies, trade will find its way, echoing sentiments of Singapore's Prime Minister. He stressed his focus on investing within India and on understandable opportunities, asserting that long-term investing does not necessitate having an opinion on every global event.
