The stock market will continue to shine in 2026! Plenty of profit opportunities will arise for active investors..
According to a report released on Wednesday, 63 percent of the Indian stock market (Stock Market in 2026) appears overvalued. Despite this, there are good profit opportunities for active investors in 2026. Investors will have several opportunities to earn significant returns.
According to the Omniscience Capital report, the Nifty 500's price-to-earnings (P/E) ratio is above 24 times, which seems expensive, but 36 large-cap companies and 46 mid-cap companies are undervalued. This means that investing in these stocks could be profitable.
Most Nifty 500 Stocks are Expensive
The report states that 66 percent of Nifty 500 stocks are expensive, but the valuation pressure is more pronounced on small-cap stocks.
According to the report, 89 out of 150 small-cap companies have undervalued shares. Similarly, 63 percent of the 100 large-cap companies also have shares that are fairly valued or undervalued. This clearly indicates that active investors can invest in these companies and earn substantial profits.
Many Opportunities for Active Investors
Sector-wise analysis revealed that companies in sectors such as Financials, Utilities, and Industrials are fairly valued or undervalued, comprising approximately 70, 18, and 83 companies, respectively. The report states that there are many opportunities for active investors to generate good returns in the Indian market, whether sector-based or based on market capitalization.
The report advises caution when investing in sectors such as Consumer Staples, Healthcare, and IT. These sectors have expensive valuations and low growth forecasts, indicating that investing in these sectors may not be as profitable. However, even in these three sectors, there are more than 60 companies that are fairly valued or undervalued.
Expected returns of 18 to 22 percent
According to the report, if earnings grow by more than 15 percent, passive investors may receive single-digit or mid-teen returns, i.e., low returns. However, active investors who invest in undervalued stocks could earn returns of 18 to 22 percent.
The report also states that the Reserve Bank of India (RBI) remains in a strong position on the economic front. India's GDP-to-total assets ratio is balanced, giving the central bank ample room to formulate and implement policies. This situation is better than that of many Western countries. According to the report, global public debt has reached historically high levels, but the current situation does not indicate any major or immediate crisis.
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