‘Q2 earnings reinforce confidence in growth revival’

The equity market is likely to perform better in 2026 as the earnings growth trajectory improves and valuations have eased, says Nimesh Chandan, chief investment officer at Bajaj Finserv AMC. In an email interaction with Abhishek Kumar, Chandan adds that global factors, particularly the US economic slowdown, could play spoilsport. Edited excerpts:

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The equity market is likely to perform better in 2026 as the earnings growth trajectory improves and valuations have eased, says Nimesh Chandan, chief investment officer at Bajaj Finserv AMC. In an email interaction with Abhishek Kumar, Chandan adds that global factors, particularly the US economic slowdown, could play spoilsport. Edited excerpts:

How do you see 2026 shaping up for the Indian market?

We are poised for an exciting 2026. Earnings growth, which is likely to improve going forward, will be the key driver of market returns. For the second half (H2) of 2025-26 (FY26), corporate earnings are projected to grow by 9-10 per cent, with growth expected to accelerate to 12-15 per cent in 2026-27.

It is likely that we will enter a virtuous business cycle, with exports and domestic consumption expected to pick up. A potential trade agreement with the US and the European Union will boost exports, while the domestic demand effect from lower direct and indirect taxes is increasing disposable income and savings. The wealth effect from rising gold prices, coupled with stable inflation, will also lift consumer confidence and spending.

What are the potential headwinds?