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Informist, Tuesday, Dec. 23, 2025

 

AHMEDABAD - Indian equity markets are likely to outperform global peers in 2026, supported by improving earnings visibility, reasonable valuation, and cyclical recovery in key domestic sectors, Trideep Bhattacharya, president and chief investment officer, equities, Edelweiss Mutual Fund told reporters. "That could be in terms of higher positive returns than the global markets or may be, fall lesser than what the global markets would fall," Bhattacharya said.

 

The Edelweiss equities head said that the key to his optimism was the changing earnings cycle. After 12–15 months of earnings downgrades, the market is now at the early stage of an upgrade phase, he said, adding this should provide earnings-led support to equities through 2026.

For the sectors that could lead the market in next calendar year, Bhattacharya identified financials and consumption. He also identified information technology as a tactical outperformer. After underperforming for over a year amid the Artificial Intelligence-led rally in global technology companies, a reversal in market leadership in 2026 could lift IT stocks, he said.

 

Among financial companies, credit growth that has mostly remained subdued through much of 2025 is showing signs of recovery. From current levels of 8–9% credit growth, Bhattacharya sees it rising to 12–14% over the next six months, improving earnings momentum. He sees valuations supportive, which positions the sector well for an upcycle.

 

Talking about the consumption theme, Bhattacharya said that improving household cash flows due to government steps in 2025, including cuts in goods and services tax, plus expectations around announcement of the Eighth Pay Commission for Central government employees in mid-2026, could translate into stronger discretionary and mass consumption demand. He said that while there is little clarity on the Eighth Pay Commission recommendations, any possible salary hikes of 25–30% for central government employees could further support consumption-linked stocks.

 

"...If you look at 2025, India underperformed the globe by 25-30%. So from valuation standpoint, the Nifty 50 valuations today would be at par with 10-year average versus United States, Korea or Taiwan or their valuations. Their markets are beyond all-time highs about 15-20%. So clearly basis performance of the last one year, we have become cheaper, or more attractive than what we were in September 2024," Bhattacharya said.

 

For Bhattacharya, the potential India-US trade deal, while difficult to quantify in economic terms, could materially boost investor confidence. Any prolonged global tariff-related uncertainty that sees trade tensions remain unresolved beyond mid-2026, and sharp currency movements, could put global growth at risk and to growth of Indian markets.

 

On being asked if Edelweiss was sitting on cash with bullish growth outlook for 2026 equity markets, Radhika Gupta, the managing director and chief executive officer of Edelweiss Mutual Fund, said that they do not hold cash beyond 3-4%. "As a principle, at Edelweiss, in the long-only funds like mid-cap, large-cap, we have a policy of not taking cash flows...Secondly, we get money largely from advisors and investors who do asset allocation decision themselves," Gupta said.

 

Edelweiss Financial Services reported a consolidated net profit of INR 1.28 billion for the September quarter on revenue of INR 18.61 billion. Shares of Edelweiss Financial Tuesday ended 0.5% higher at INR 109.07 on the National Stock Exchange.  End

 

Reported by Sunil Raghu

Edited by Akul Nishant Akhoury

 

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