Ranka noted that India’s earnings growth outlook has slowed from pre-COVID levels of 13–14% CAGR to around 9–10%. “Investors should reset their return expectations. On an index level, 10% is reasonable going forward. However, with Nifty EPS expected at 1,300 for FY27, the fair value works out to 26,000 over the next 10–12 months. This is a good time to start deploying capital with a medium-term view,” he said.
On the earnings front, he expects single-digit growth in the first half of FY26, but double-digit growth in the second half as GST rationalisation and policy support kick in. “For the full year, earnings growth should average 10–11%. FIIs will return strongly once India goes back to 12–13% growth,” Ranka added.
Sector outlook
Ranka highlighted cement and telecom as his top picks. GST cuts in cement are expected to boost margins and volumes, while the telecom sector is likely to benefit from a fresh round of tariff hikes ahead of the Jio IPO. “Telecom is insulated from global uncertainties and offers high earnings visibility. Cement should see both margin uptick and higher demand after the monsoon season,” he said.
Autos could deliver strong Q3 numbers but may face consolidation afterwards, while FMCG stocks look expensive after recent rallies, making incremental gains harder. Ranka was cautious on pharma due to patent expiries and on IT, where earnings may remain subdued despite AI-led adoption.
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