Diwali 2026: 9 fund managers reveal top picks

This year, nine fund managers have shared their top picks for Diwali 2026. Instead of chasing after the next multi-bagger, experts advise focusing on proper asset allocation across equity, debt, and commodities through mutual funds. They are reliable and consistent, much like diyas that keep burning bright. Some small- and mid-cap stocks are currently overvalued and may not continue their recent performance. Low-floating stocks and momentum stories are also fragile.

For your investment portfolio, banking, financial services, and insurance (BFSI), as well as premium consumption sectors such as automobiles, alcoholic beverages, travel, and home improvement, are recommended. Healthcare and select manufacturing sectors also offer opportunities. It is advised to stay away from excessively valued stocks. A diversified portfolio consisting of equities, fixed income, and precious metals is suggested, allocating a limited percentage (10-20%) to gold.

The interest rate cycle is changing, so close-ended performing credit alternative investment funds (AIFs) or those offering income from interest payments might be better options for debt funds. Nilesh Shah, MD of Kotak Mahindra AMC, suggests these funds can benefit from gaps in corporate credit supply as banks, mutual funds, and insurers pull back.

Nilesh Shah, MD of Kotak Mahindra AMC, suggests that for your investment portfolio, BFSI should be your motichoor laddu, while consumption, healthcare, jewellery, and shipbuilding should be your premium consumption segment. IT would be like dark chocolate, offering selective value. To protect your portfolio amid market risks, diversification, staying invested through volatility, and keeping some cash aside are recommended.

In the upcoming year, fund managers advise investing in equities as they provide growth and help outpace inflation. Gold has already added significant sparkle to portfolios, but it is still a valuable diversifier, albeit with limited exposure (10-20%).