After 10% cut, earnings will only rebound in second half of FY26

The biggest myth is that stopping SIPs during slump prevents losses. In reality, SIPs help mitigate price risk. Trideep Bhattacharya President & CIO-equities at Edelweiss AMC

- Dipti Sharma

As global markets navigate uncertainty, factors that could drive foreign capital into India would be the stability of the dollar, transparency on tariffs and trade barriers, and a strengthening earnings outlook, according to the investment head of Edelweiss Mutual Fund.

Earnings have seen a 10% downgrade for FY25, affecting large, mid-, and small-caps alike, said Trideep Bhattacharya, president and chief investment officer-equities at Edelweiss Asset Management Company Ltd, which oversees equity assets totaling nearly ₹23,000 crore.

This broad-based reduction suggests a gradual recovery, rather than an immediate rebound, he said, adding, "We anticipate earnings growth to pick up in the second half of FY26 (2HFY26) as economic conditions stabilize."

Edited excerpts. Despite an ongoing debate over continuing systematic investment plans (SIPs) in small- and mid-cap funds and the valuations in broader market running hot, small- and mid-caps are often the go-to option for superior returns when discussing growth. What is your take on this?

In our view, markets are currently differentiating between beta and alpha within the mid- and small-cap segments. Over the past four years of strong market conditions, two distinct types of stocks have delivered significant gains:

Beta or narrative stocks: companies that align with prevailing market themes or popular narratives but possess inherently weak business models with structural vulnerabilities; and alpha or genuine growth stocks: companies with robust business models and earnings growth prospects that meaningfully outpace those of large caps.