{"id":16806,"date":"2025-11-05T12:01:08","date_gmt":"2025-11-05T06:31:08","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=16806"},"modified":"2025-11-05T12:01:08","modified_gmt":"2025-11-05T06:31:08","slug":"markets-poised-for-h2fy26-upside-as-corporate-earnings-rebound-says-prescient-capital-founder","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/markets-poised-for-h2fy26-upside-as-corporate-earnings-rebound-says-prescient-capital-founder\/","title":{"rendered":"Markets Poised for H2FY26 Upside as Corporate Earnings Rebound, Says Prescient Capital Founder"},"content":{"rendered":"

Corporate Earnings Rebound to Power Indian Markets in H2FY26, Says Prescient Capital Founder; Four Sectors in Focus<\/p>\n

India\u2019s equity markets are poised for a sharp rebound in the second half of FY26, driven by a revival in corporate earnings and strong macroeconomic support from the Government and the Reserve Bank of India (RBI), according to Sonal Minhas, Founder of Prescient Capital.<\/p>\n

He believes that the earnings cycle bottomed out in Q1 FY26, and sectors that were laggards in recent quarters \u2014 particularly banking and consumption \u2014 have likely found their footing. The coming months, Minhas adds, could mark the beginning of a new uptrend for domestic equities as policy stimulus and structural reforms take effect.<\/p>\n

Corporate Earnings Bottomed Out; Revival Underway in Key Sectors<\/h2>\n

\u201cThe markets are set for a rebound in H2 FY26, supported by a revival in corporate earnings,\u201d said Minhas. \u201cSectors that struggled last quarter such as banking and consumption are now stabilising and will likely show stronger results going forward.\u201d<\/p>\n

He added that the auto and chemical industries are also expected to deliver improved performance. \u201cThe auto sector should benefit from GST rate cuts and rising premiumisation trends, while the chemicals sector appears poised for a cyclical turnaround after years of price pressure from Chinese dumping,\u201d Minhas said.<\/p>\n

Also Read : Trump\u2019s Tariffs Hit US Consumers, India\u2019s Exports; New Delhi\u2019s Diversification Pays Off<\/a><\/p>\n

Macroeconomic Tailwinds Strengthening Sentiment<\/h2>\n

According to Minhas, the Government\u2019s fiscal measures and RBI\u2019s accommodative stance are beginning to filter through the economy. The India\u2013US trade deal, he noted, is progressing positively, and while its impact on GDP growth could be marginally negative (up to 0.75 percent in the worst case), any favourable development on that front will \u201cact as a sentiment booster\u201d for the markets.<\/p>\n

The combination of macroeconomic stability, monetary easing, and domestic demand recovery sets the stage for a broad-based rebound in equities in the second half of FY26.<\/p>\n

Banking Sector: Strong Fundamentals to Drive Recovery<\/h2>\n

The banking sector, which witnessed muted earnings growth in Q1 FY26 due to the RBI\u2019s 50-basis-point repo rate cut, is expected to bounce back as lending activity gains momentum.<\/p>\n

Credit offtake has grown 10 percent year-on-year till August 2025, indicating a healthy appetite for loans across corporate, MSME, and retail segments. \u201cAs lower interest rates are fully transmitted, we expect a pickup in credit demand, especially from the corporate and MSME sectors,\u201d Minhas noted.<\/p>\n

Consumption Revival: GST Reforms to Release \u20b92.5 Lakh Crore Back into the Economy<\/h2>\n

The consumption sector faced temporary headwinds earlier in FY26 due to subdued urban spending, tight personal credit, and logistical disruptions from Operation Sindoor. However, rural demand remained resilient, cushioning the overall slowdown.<\/p>\n

New GST reforms introduced in September 2025 are now expected to inject \u20b92\u20132.5 lakh crore back into the economy through tax savings and higher disposable incomes. This could translate into \u20b92,000 per capita in FY26 and \u20b94,000 per capita in FY27 for the bottom 50 crore citizens \u2014 providing a meaningful boost to consumption.<\/p>\n

Auto & Auto Ancillary: GST Cuts and Premiumisation Trends to Fuel Growth<\/h2>\n

The automotive industry is emerging as a key beneficiary of the ongoing tax rationalisation measures. Minhas expects the GST rate cuts, coupled with a rising trend of premiumisation (increasing sales of SUVs, EVs, and high-end bikes), to drive strong growth in both OEMs and component manufacturers.<\/p>\n

He also highlighted the import substitution trend in EV components \u2014 motors, controllers, and charging systems \u2014 as a new avenue for growth. \u201cAuto ancillaries will likely outperform the broader auto industry due to increased content per vehicle and strong demand visibility,\u201d he said.<\/p>\n

Chemicals Sector: Poised for a Cyclical Upswing<\/h2>\n

After facing four to five years of headwinds from Chinese dumping, the chemicals industry \u2014 particularly in agrochemicals, dyes, pigments, and performance chemicals \u2014 is set for a cyclical turnaround.<\/p>\n

With demand recovering and input prices stabilising, valuations in the sector appear attractive. \u201cThis is one of the few spaces where we see both earnings momentum and valuation comfort aligning,\u201d Minhas remarked.<\/p>\n

Microfinance Sector Recovery Strengthens<\/h2>\n

Minhas is also optimistic about the microfinance (MFI) sector, which has undergone significant regulatory tightening since 2024. The RBI and Microfinance Institutions Network (MFIN) capped total borrowings per customer to curb over-leverage, initially hurting asset quality.<\/p>\n

However, he noted that top-tier MFIs have strengthened credit checks and diversified portfolios, leading to a steady recovery. \u201cThe sector is expected to post strong loan book expansion in H2 FY26,\u201d Minhas said.<\/p>\n

Valuations Suggest Market Is Pricing Moderate Growth<\/h2>\n

At present, the BSE Sensex trades at a TTM P\/E of 23x, slightly above its long-term average of 21.8x. According to Minhas, this implies that the market is already factoring in around 15 percent earnings growth over the next year.<\/p>\n

\u201cWith multiple catalysts \u2014 policy rate cuts, GST relief, and higher disposable incomes \u2014 we expect mid to high double-digit earnings growth from Q3 FY26 onward,\u201d he said.<\/p>\n

He added that the real estate and gold cycles have significantly boosted household wealth. Gold holdings per capita have increased 2.7x since 2022, from \u20b982,000 to \u20b92.24 lakh, enhancing consumer confidence and spending capacity.<\/p>\n

IT Sector: A Contra Play for Long-Term Investors<\/h2>\n

While Minhas remains cautious on the IT sector in the near term due to global spending slowdowns, he sees selective long-term opportunities.<\/p>\n

\u201cThe AI investment cycle will create winners among firms that specialise in automation, data analytics, and AI integration,\u201d he said. \u201cIt\u2019s too early for a broad-based IT recovery, but niche players with strong AI focus could see order inflows rise in 2026\u201327.\u201d<\/p>\n

Global Factors and the Road Ahead<\/h2>\n

Globally, India has underperformed major markets over the past year, with the Gift Nifty up only 7 percent, compared to the Nasdaq (+31%), Shanghai Composite (+21%), and German DAX (+20%).<\/p>\n

Minhas cautioned that the AI-driven rally in U.S. and Chinese equities could face corrections reminiscent of the early-2000s dot-com bubble. \u201cA 15\u201320 percent correction in Indian markets is possible if global equities cool off,\u201d he warned, adding that Prescient Capital continues to deploy capital gradually and selectively.<\/p>\n

\u201cOverall, the next leg of India\u2019s bull market will be led by domestic sectors \u2014 banking, consumption, auto, and chemicals \u2014 underpinned by earnings recovery and macro stability,\u201d he concluded.<\/p>\n