“After four quarters, we finally saw an increase in earnings per share last quarter. Corporate commentary also points to a stronger second half of FY26,” he said.
Strengthening the profit cycle; Growth for FY27 at 14-15%
According to Sanghavi, return prospects improve significantly when earnings visibility increases.
“If we grow FY27 earnings by 14-15% on a consensus basis, the strength of earnings is strong enough to keep markets supported,” he said.
The only missing piece, he noted, is a sustained recovery in inflows from foreign portfolio investors (FPIs).
“As profits grow, FPI flows should eventually follow suit. That is the final piece to fall into place,” he added.
Rupee Volatility, IPO Offers Add Short-Term Pressure
On the recent market dip and volatility, Sanghavi attributed much of the weakness to fluctuations in the rupee.
“The latest round of volatility is partly due to Indian Rupee (INR) volatility. Once that stabilizes, markets will have a broader economic and earnings matrix to move higher,” he said.
He also emphasized that the increase in IPOs and capital raising temporarily absorbs liquidity.
“Large capital raisings always eat up market liquidity. Combined with FPI hesitation, this creates short-term pressure,” he noted.
A cyclical recovery in consumption is underway
Sanghavi remains optimistic about the Indian consumption cycle, supported by VAT cuts, monetary easing and government spending.
“Consumption has not done much for years. But in the last 12 months, the Centre, states and RBI have taken consistent steps to boost household spending,” he said.
He expects the consumption rebound to last 12 to 24 months, initially led by discretionary segments.
Sectors likely to benefit first
- Travel and tourism
- Consumer electronics and durable goods
- Cars
- Other experiential categories
- Consumer goods are expected to pick up later in the consumption cycle.
General outlook: medium-term trend “very constructive”
“We have stable macros, improving earnings and policy support. Over the medium to long term, markets look very constructive,” Sanghavi said, adding that structural themes remain intact in the short term despite the turmoil.
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