“We’re seeing more than 15% median earnings growth among companies that have reported so far — that’s a good start,” Shenoy said in an interview with ET Now. “Largecaps could benefit if foreign investor selling reduces or reverses, given FIIs’ higher concentration in these names.”
Earnings resilience and GST boost ahead
Shenoy noted that while the broader market has held steady despite external headwinds, the next phase of earnings expansion could be driven by consumption-led demand as GST benefits begin to flow through.
“We expected the GST impact to reflect only in the October-December quarter, so stronger results from consumption names may still be ahead,” he said.
He added that mid and smallcap companies have shown healthier profit growth so far. “If we look at pure economic growth data, it’s the smaller firms leading the charge,” Shenoy observed.
Largecaps gain relief as FII flows stabilize
While largecaps like Reliance Industries, HDFC Bank, and select financial majors have led recent gains, Shenoy believes the performance gap between market segments could narrow in FY26.“Flows are a key factor. FIIs have kept largecaps subdued compared to midcaps, but any reversal there could push the Nifty higher,” he said.
Portfolio tilt: healthcare, autos, and industrials in focus
On sectoral positioning, Shenoy said Capitalmind’s quant-driven portfolios are currently skewed toward healthcare, autos, and industrials, supported by solid data and earnings upgrades.
Healthcare: “India’s healthcare sector remains under-penetrated and undervalued. There’s steady growth potential, especially after the CGHS rate hikes,” Shenoy said.
Autos & Durables: “Auto companies are seeing strong volume and margin recovery, aided by GST changes and festive demand.”
Industrials: “Order flows have been strong, and we expect this to translate into profit growth over the next few quarters.”
He added that financials, especially large private banks and NBFCs, continue to show consistent performance, while FMCG and textiles remain relatively soft spots due to valuation and export challenges.
‘India’s growth story intact despite global volatility’
Shenoy emphasized that domestic macro fundamentals — including lower inflation, steady liquidity, and resilient corporate balance sheets — remain key strengths for India’s markets.
“Even with external pressures, India’s structural growth story is intact. Industrial order books are strong, private capex is returning, and policy stability remains a tailwind,” he said.
Outlook: Balanced optimism with sector rotation ahead
While Shenoy remains “naturally long” on India’s growth prospects, he sees sector rotation as a defining theme for the next few quarters.
“Financials will likely lead near-term stability, while autos, healthcare, and industrials could deliver alpha,” he added. “Earnings visibility is improving, and the setup for FY26 looks encouraging.”