After a big year for gold, can equities steal the spotlight again in 2026? Deepan Mehta answers

After a year dominated by gold and metals, Indian equities—especially small and midcaps—could be poised for a comeback in 2026, according to Deepan Mehta, director, Elixir Equities.

Speaking to ET Now, Mehta said that 2025 was a reminder that no asset class moves forever. “If you had asked me a year ago, I would have said equities all the way. But 2025 was gold. Hardly anyone predicted the rally in precious metals delivery,” he noted.

With the success of multi-asset strategies evident in 2025, Mehta believes 2026 could mark a rotation back to equities, especially segments that have been lagging for years. “Small- and midcaps have been in the jungle for two to three years. Earnings have grown and valuations are now more reasonable,” he said.

Copper demand is strong, but valuation remains a concern

On a sharp rally in copper stocks like Hindustan Copper, Mehta acknowledged strong tailwinds from electrification, power distribution investment and rupee depreciation. “Copper demand is set to rise structurally, but Hindustan copper looks expensive even by metal standards,” he warned, pointing to volatility in copper prices and limited visibility on capacity expansion.

Vedanta is seen as a choice metals play

Among metals stocks, Mehta singled out Vedanta as the better long-term opportunity. He said the proposed demerger could help address concerns around holding-company debt. “Once the demerger takes place, the debt overhang should ease. The core businesses—zinc and aluminum—have strong growth dynamics and the group is one of the lowest-cost producers globally,” he said.

Positive on Adani Ports as trade volumes pick up

Mehta also remains bullish on Adani Ports, citing operating leverage and long-term business potential. “Ports are a great business. Costs are largely fixed, and as volumes increase in acquired assets, there is meaningful scope for earnings improvement,” he said, adding that valuations remain reasonable despite global trade challenges.

Coal India is a trading bet, not a long term compounder

Mehta was cautious on Coal India. Despite low valuations and high dividend yields, he said volume growth has disappointed. “Coal India may see a trading rally if coal prices pick up, but I don’t see it as a long-term wealth creator,” he said.

The auto sector remains a clear overweight call

Mehta is firmly bullish on automobiles, especially commercial vehicles (CVs). “November CV numbers were very strong,” he said, naming Ashok Leyland as his top CV pick due to execution strength, EV bus exposure and improving market share.

For the passenger and premium segment, Mehta prefers Mahindra & Mahindra, Eicher Motors and TVS Motors. “TVS stands out for consistency, technology leadership and ability to perform across the cycle,” he said.

NBFC: Stick to diversified lenders

On the financial front, Mehta reiterated his preference for diversified, multi-product lenders. He invests in Cholamandalam Investment and Finance citing the best risk management and recovery system. “Growth has slowed a bit, but this is a conservative lender with a strong track record,” he said.

He added that investors should favor companies like Bajaj Finance and L&T Finance over single-product lenders, while gold loan companies could do well from a near-term trading perspective.

Overall, Mehta believes that equities could regain relevance after a metals-led year in 2026, with stock selection and sector rotation playing a key role. “Every asset class has its moment. The key is to invest where earnings visibility and valuation are aligned,” he said.