Speaking to ET Now, Subramaniam said the Nifty IT Index, which underperformed sharply over the past year, is already showing early signs of reversal. “If you compare one-year and three-month returns, IT has been down double digits over one year but up double digits over the last three months. That clearly shows the tide is turning,” he said.
IT sector poised for revival in 2026
Subramaniam expects near-term earnings to benefit from the nearly 7% depreciation in the rupee, which should boost rupee-denominated revenues for export-heavy IT companies. He added that the sector is undergoing a structural reset, with companies investing aggressively in artificial intelligence.
“You are seeing IT players either acquiring AI firms or investing heavily in AI capabilities. At the same time, they are retrenching mid-level staff who are not AI-ready and hiring fresh talent with AI skills,” he said. According to Subramaniam, AI consulting is likely to become a major growth driver for the sector in the coming year.
From a global flows perspective, he believes IT could again attract foreign institutional investors. “With US rate cuts expected, FIIs may prefer IT because it offers a natural currency hedge. If the rupee weakens, IT earnings tend to compensate,” he noted, calling the sector a potential “dark horse” for 2026.
Realty could be a strong contra play
Beyond IT, Subramaniam is constructive on real estate, a sector that significantly underperformed in 2025 despite strong fundamentals. He explained that while housing unit sales moderated, property values continued to rise, driven by demand for premium and high-end homes.
“In 2026, we should finally see the GST and interest rate cuts reflect in realty stocks,” he said. Developers, he expects, will increasingly pivot towards affordable housing, aided by lower borrowing costs and reduced GST on building materials. Land acquisition on city outskirts and smaller-ticket projects could drive volumes in the next phase.Another key tailwind for real estate is the expansion of Global Capability Centres (GCCs) in India, partly triggered by global trade uncertainties and visa-related issues abroad. “GCC growth is a direct corporate real estate play and will reinforce office space demand,” Subramaniam said.
REITs and funding ease to support developers
Subramaniam also highlighted the improving funding environment for real estate developers. With REITs gaining equity status, more mutual funds are expected to increase allocations to REITs. “We could even see a dedicated REIT thematic fund being launched, offering equity taxation with stable income,” he said. This, he believes, will significantly enhance funding access for developers and support sectoral rerating.
Pharma theme still led by GLP-1
On pharmaceuticals, Subramaniam said GLP-1 drugs will remain the dominant growth theme in 2026. “We are the obesity capital of the world. Domestic demand for GLP-1 molecules itself will be huge. It’s a transformative story and will continue to drive pharma valuations,” he said, adding that investors need not look much beyond this trend for near-term growth triggers.
Capex focus shifts towards private sector enablement
On infrastructure and capital expenditure, Subramaniam expects the government to subtly shift strategy. Instead of only driving public capex, the focus may move towards enabling private sector investment through public-private partnerships, PLI tweaks and asset monetisation.
“The government will aim to maintain stable capex but divert more money towards consumption and putting cash in the hands of the middle class,” he said. Roads, logistics and other PPP-led infrastructure segments could see increased private participation as a result.
Outlook for 2026
Overall, Subramaniam believes 2026 could reward investors willing to take selective contrarian bets. “IT, real estate and certain capex-linked themes have underperformed, but the building blocks for a recovery are falling into place,” he said, adding that disciplined sector rotation and patience will be crucial for generating alpha in the year ahead.