Equity commentary From Edelweiss Mutual fund ::

We remain constructive on Indian equities from a medium- to long-term perspective, as lower oil prices, easing inflation, fiscal measures, and government/private investments perk up the economy and set up a favourable backdrop for earnings upgrades.

As we look ahead, a blend of improving global trade dynamics, the onset of India’s earnings upgrade cycle, and a broader shift of capital toward emerging markets creates a supportive backdrop for India to deliver resilient growth and market outperformance in the coming year.

Key sectors to watch include IT services and engineering on improving trade dynamics, capital goods, defence, and discretionary consumption amid the earnings upcycle, and autos, NBFCs, and mid-cap lenders poised to benefit from rate cuts.

The sector’s earnings appear to be basing out, supported by the first 1–2% earnings upgrades seen in the recent quarter after four to six quarters of downgrades.