Speaking to ET Now, veteran investor, Manishi Raychaudhuri noted that the year has begun on a strong footing for Asian equities. “2026 has started with a bang,” he said, pointing out that MSCI Asia ex-Japan has already risen more than 4% within the first four to five working days of the year.
Raychaudhuri highlighted three to four dominant themes shaping the Asian equity outlook. The foremost among them is continued fiscal expansion across developed markets. He cited U.S. President Donald Trump’s “one big beautiful bill act” (OBBA), which is expected to put more cash in the hands of American households, alongside similar fiscal momentum in Europe.
“Germany, in particular, is expanding fiscally, with infrastructure and defence spending likely to reach around 5% of GDP over time. These are really big numbers,” he said. He added that parts of Asia, especially China, could also see increased fiscal spending as policymakers work to counter prolonged deflationary pressures.
Another overarching theme remains persistent geopolitical tensions, which Raychaudhuri described as self-evident given recent global developments. Closely linked to both fiscal expansion and geopolitical uncertainty is a notable rise in commodity prices.
“Precious metals did really well in 2025. Over the last quarter, even base metals like aluminium and copper have started performing,” he said. According to Raychaudhuri, the world could be on the cusp of a base metals supercycle, driven by surging demand from AI-related investments that may not be matched by adequate capacity additions.
AI capital expenditure itself continues to be a structural growth driver, led primarily by hyperscalers, though new entrants are also joining the race. This trend, he noted, benefits “picks and shovels” companies across North Asia, particularly in Korea, Taiwan, and China.Taking these factors together, Raychaudhuri said his outlook on Asian equities remains positive. While headline indices have already moved up, leaving limited near-term upside of around 5% to 6%, he stressed that targets could be upgraded if earnings estimates continue to improve. “We are already seeing earnings upgrades in Asia, unfortunately not so much in India,” he added.
India: Overweight, but with a selective lens
On India, Raychaudhuri pegged a Sensex target of 91,000 by the end of 2026, implying a potential upside of 7% to 8% from current levels. Despite the modest index-level return expectations, he said India remains overweight in his Asian model portfolio.
“The overweight is purely because stock selection opportunities are immense,” he said, adding that underperformance over the last 15 to 16 months has made several stocks more attractive to institutional investors. India features alongside Hong Kong, China, and Korea as overweight markets, though the rationale for India is more stock-specific rather than driven by a broad-based bullish market view.
Preferred sectors within India
Within the Indian universe, Raychaudhuri outlined a clear set of sectoral preferences. Financials top the list, particularly private banks, which he noted have underperformed over the past three years barring the second half of 2025.
Discretionary consumption is another area of focus, with exposure taken through market-leading automobile companies operating in niche segments. He also expressed a preference for healthcare services, favouring hospital and diagnostic chains over pharmaceutical manufacturers.
Commodities form the third pillar of his strategy, with exposure through diversified conglomerates such as Reliance Industries. Industrials also feature prominently, encompassing infrastructure, capital goods, and defence-related plays.
“Valuations need to be watched closely because these stocks have run up,” he cautioned, while adding that the long-term trajectory for infrastructure, capital goods, and industrials in India remains firmly in place.
Notably absent from his preferred list are IT services stocks. Despite the rupee’s depreciation offering a tactical tailwind, Raychaudhuri believes the sector faces structural challenges. “We think this is an AI loser for the foreseeable time horizon,” he said.
As 2026 unfolds, Raychaudhuri’s strategy underscores a blend of macro-driven themes and bottom-up stock selection, with Asia — and selectively India — continuing to offer opportunities for discerning investors amid a rapidly changing global backdrop.