.According to her, real earnings momentum is likely to take hold in the second half of FY26, with Q2 expected to mark the bottom. Until then, markets may see limited upside as they wait for fresh triggers to emerge.
It’s difficult to pinpoint exactly, but stock-specific performance has stood out in a few pockets where numbers were better than expected. Broadly speaking, compared to the Nifty, the broader market has performed relatively better. There could be multiple reasons—overall demand wasn’t as weak as feared, and companies made efforts to improve profitability. Even raw material prices remained relatively stable.
Pricing pressure wasn’t as visible either, which helped metal companies outperform. Overall, demand held up, and earnings were marginally better than anticipated.
The stock reaction is influenced by more than just earnings. Earlier, sentiment was negative both domestically and globally, but the backdrop has now turned more positive. After such a sharp correction, a pullback was expected.
Yes, I believe it’s going to last longer. Most of the recovery that had to happen has already taken place. From here, there’s limited upside, and the market is likely to consolidate until new triggers emerge—and those will take time. While earnings were better, H1FY26 is expected to remain along similar lines. It’s largely from H2 that we expect the base effect to kick in, leading to stronger recovery numbers.
Regarding the trade war, it’s likely to continue for at least another three months. No bilateral deal has been reached yet. Things will take time to settle, and that’s why the time correction phase will continue. The market is expected to consolidate around current levels.
Yes, Q1 is expected to be similar to Q4. Then in Q2, we may see a bottom, and from there, the recovery should begin. However, the main growth will likely be seen in H2.
In Q1, do you expect the wave of downgrades, especially prevalent in the last three quarters but not so much in Q4—to come to a halt?
Hopefully, yes. If you look at global trends, the Chinese economy has shown some improvement, and the government’s support through stimulus measures has helped stabilise the situation. The tariff war appears to be on hold for now. Otherwise, companies would have had to revise their logistics strategies and seek new markets, which could have disrupted their entire cost structure.
So from that perspective, nothing has drastically changed for companies. We believe the ratio of downgrades to upgrades will remain more or less stable.
