Speaking to ET Now, Subramaniam said markets are currently in a “wait-and-watch phase”, consolidating after last year’s sharp rally, but the fundamentals are gradually aligning for an earnings-led recovery.
“The GST announcement caused a temporary postponement of purchases this quarter. Add to that the global slowdown, particularly in IT and services, and the time it takes for government spending to flow through — all of this means that the recovery will take shape only by the January quarter,” he said.
Subramaniam noted that the upcoming festive season sales will likely boost topline growth in consumer-facing sectors, with the impact visible in Q3 FY26 results. “The second half will be much better than the first half,” he added.
IT sector in focus: Correction overdone, AI job cuts a smart move
As the earnings season kicks off with IT majors, Subramaniam said there’s plenty to watch for in the upcoming quarterly updates from TCS, Infosys, and peers.
He believes that the market correction in IT stocks was “overdone”, especially after concerns around the H-1B visa cap in the US.“Last year, India’s top five IT companies together got just 13,000 H-1B visas. Their business models have shifted toward onshore and nearshore delivery. So, the impact is far less severe than the market fears,” he explained.According to him, TCS’s commentary on deal momentum and large-ticket negotiations in the US market will be crucial in setting the tone for the sector.
He also pointed out that a weaker rupee could act as a tailwind for IT exporters. “In rupee terms, earnings should benefit from depreciation, though constant currency growth will be a key metric to track,” he added.
AI layoffs not a red flag, they’re a realignment
Addressing investor concerns over AI-related job cuts, Subramaniam offered a contrarian view.
“Any job rationalization linked to AI adoption is actually a positive sign. It means companies are preparing their workforce for the next phase of technology. It’s smart thinking — not weakness,” he said.
He expects companies like TCS and Infosys to ramp up AI hiring from colleges and possibly pursue acquisitions in AI-driven domains to strengthen their future capabilities.
Market set for an earnings-led rally in 2026
Despite current volatility, Subramaniam remains optimistic about India’s long-term equity outlook.
He believes that while the September-quarter results may stay subdued, the earnings cycle will bottom out soon.
“Once earnings pick up and consumption demand rebounds, markets will start reflecting those fundamentals well before Q3 numbers come in,” he said.
For investors, he advises a disciplined accumulation strategy — using short-term dips in quality names to build positions ahead of an expected earnings upcycle in 2026.
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