Duggad told ET Now that while investors have been frustrated by prolonged consolidation, this phase was crucial. “The market has cooled off, valuations are healthier, and we now have the foundation for the next rally,” he said.
Earnings downgrades end after 5 quarters
Duggad noted that after five consecutive quarters of earnings downgrades, the September quarter finally delivered an earnings upgrade, especially from broader market companies. “We are looking at a revival towards 10–12% earnings growth after a flattish year,” he added.
With the government and RBI rolling out several measures over recent months, Duggad expects their positive impact to reflect meaningfully in H2 FY26.
Where the next profit pools will be created
India’s long-term profit pools—financials, consumption and technology—remain unchanged, but the sub-segments generating wealth are shifting, he said.
Financials:
Beyond large banks, new profit pools have emerged in capital markets—insurance, broking, exchanges and wealth management—along with stronger NBFCs.
Consumption:
The wealth-creation engine has shifted decisively from staples to discretionary. “No large consumer staple has compounded revenues above 10% in the last decade,” he pointed out. With India moving towards a $4,000 per capita income, discretionary categories are set to expand sharply.
Technology:
New-age tech—quick commerce, health-tech, internet platforms—will form the next decade’s profit pools as these companies start moving from revenue expansion to profitability.
Market stagnation has been healthy
Many new investors who entered during the post-Covid bull run are seeing consolidation for the first time, Duggad said, adding that the pause is healthy and resets expectations. Midcaps and smallcaps, despite trading at a premium, are delivering 2–3x higher earnings growth than largecaps — making valuations more digestible.
Investor strategy: Stay invested
Duggad’s message to investors: Remain patient, keep asset allocation disciplined, and look beyond the noise.
With macro stability improving and earnings momentum building, the market may finally be ready to break out of its long consolidation phase.