After a year of downgrades, earnings cycle may turn in 2026, says Edelweiss’ Trideep Bhattacharya

Indian equity markets could see support going into 2026 as corporate earnings begin to improve after a prolonged period of downgrades, according to Trideep Bhattacharya, CIO–Equities at Edelweiss Asset Management, which managed assets worth about ₹3.52 lakh crore as of November 2025.Bhattacharya said the past year was marked by earnings estimate cuts of 10–12%, but the September quarter showed early signs of a turnaround. “Net net earnings are looking better than what people initially thought,” he said, adding that channel checks point to a possible 2–3% upgrade in overall earnings estimates.

He noted that this improvement could mark the start of a sustained upgrade cycle, following a year in which weak earnings led to market consolidation. According to Bhattacharya, confirmation in the December quarter could prompt analysts to revise full-year numbers higher.

Also Read | Gold, midcaps and a new investing mindset: Swarup Mohanty on 2026 outlookOn sector preferences, Bhattacharya highlighted consumer discretionary and financials as areas showing traction. In consumption-linked segments, he said demand trends in autos and big-ticket purchases appear steady. “The optic seems to be sustaining,” he said, indicating that sell-side upgrades could follow once earnings visibility improves.

Within financials, Bhattacharya said some segments are bottoming out, which may lead to a recovery in growth rates. On information technology, he described performance as “broadly in line” with expectations, noting that the impact of furloughs has been manageable so far.

He also spoke about changing policy priorities, suggesting that while the previous government term focused on infrastructure and capital goods, future spending could tilt more towards consumption alongside infrastructure. Within this space, Bhattacharya sees defence as a key area, while remaining selective on railways.Also Read | Ambuja Cements’ merger plan may lift valuations and cash flows, says Nirmal Bang’s Jyoti Gupta

Commenting on initial public offerings (IPOs), Bhattacharya advised caution, saying true price discovery happens only after lock-in periods expire. “We don’t get excited by the listing day price move,” he said, adding that several recent offerings have been priced tightly.

On asset allocation, Bhattacharya said equities and gold act as medium-term hedges against inflation, but equities tend to outperform when earnings are strong. He said a sustained earnings upgrade cycle could favour equities over precious metals.

He also flagged opportunities in the pharmaceutical space linked to GLP-1 drugs, noting that Edelweiss AMC has positioned portfolios to benefit from Indian companies planning generic launches in the coming year.

For the full interview, watch the accompanying video

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