4 min read Last Updated : Jan 14 2026 | 12:09 AM IST
Indian equity markets have entered calendar year 2026 amid a complex backdrop of geopolitical uncertainty, supply-chain realignments, and pivotal domestic events such as the Union Budget and quarterly earnings season. While global investors remain wary of escalating tensions -- from Russia-Ukraine to developments in Venezuela, and Iran -- the key question for India is whether these risks are already reflected in valuations, or if further volatility lies ahead.
In this backdrop, Trideep Bhattacharya, President & Chief Investment Officer- Equities at Edelweiss MF tells Nikita Vashisht in an email interview whether India is insulated from global shocks, its positioning versus other emerging markets, and why domestic demand-led growth could provide a crucial buffer in the coming year. Edited excerpts:
How vulnerable are Indian equities to escalating geopolitical tensions and supply-chain disruptions in 2026? Are the risks priced-in?
Indian equities are moderately insulated from the direct fallout of Russia-Ukraine or Venezuela tensions due to limited direct trade exposure, helping buffer fundamental impact. However, sentiment can turn volatile during acute geopolitical shocks, making market psychology a key risk to monitor.
While some risk premiums are visible, broader pricing-in remains incomplete, especially in rate-sensitive and global-linked sectors. Continuous risk surveillance remains essential for positioning.
What is your assessment of India's positioning versus other emerging markets amid global uncertainty?
While India underperformed global markets in 2025 -- a year dominated by AI beneficiaries -- it appears relatively better positioned for 2026 as the exuberance around AI moderates.
India's predominantly domestic demand-driven growth model and lower reliance on global cyclical sectors provide resilience in this phase. Its perception as an "anti-AI" market offers a cushion during rotations away from AI-heavy themes. Moreover, a strong consumption backdrop, supported by government stimulus and a turnaround in credit growth, underpins earnings stability versus global peers who are more exposed to global trade disruptions and technology-led cyclicality.
How should investors rebalance portfolios amid event-heavy quarters like Budget and quarterly earnings season, along with global risks?
Historical evidence shows geopolitical headlines often have short-lived impacts on markets. Maintain strategic asset allocation through events, avoid knee-jerk shifts, and rebalance only when fundamentals change meaningfully.
Tactical trimming or layering can be considered within risk budgets, but core allocations should reflect long-term risk/return objectives co-developed with advisors.
What are your expectations from Budget 2026? Which sectors could be structural winners or losers from the announcements?
Budget 2026 could likely balance fiscal prudence with growth support. While Consumption could emerge as a tactical winner if announcements around the 8th Central Pay Commission materialise in a meaningful way, we expect the defence sector to be a structural winner, backed by higher capital allocation and continued push under Aatmanirbhar Bharat agenda, from budgetary announcements.
Select export-oriented sectors such as textiles, apparel, and gems and jewellery may see targeted relief amid US tariff pressures. Overall, the Budget should reinforce domestic demand and long-term competitiveness, reflecting India’s readiness to navigate a tariff-led global environment.
Will Q3FY26 earnings show first signs of consumption revival?
Early indicators of consumption revival emerged in high-value discretionary segments like autos and jewellery in the Q2FY26. We expect broader signals in Q3FY26, with consumer staples/everyday demand categories and higher hotel occupancy rates reflecting more widespread uptick as rural and urban spending gains traction along with better traction at luxury end of consumption. Gradual improvement in household income and targeted policy benefits should underpin this more holistic revival.
As global economic power gradually shifts and supply chains realign, how well is India positioned to capture long-term capital and growth, from an investor's perspective?
The global economy is gradually transitioning from a unipolar to a multipolar structure over the next decade, with economic leadership broadening beyond the US to include multiple large economies, notably India. This shift is structurally positive for India, as it should support sustained capital inflows over time. However, as global currencies and capital markets adjust to this new reality, the transition could be disruptive if not handled carefully by policy makers, potentially triggering short-term risk-off phases across asset classes.
 "Broader geopolitical risks not fully priced-in, says Trideep Bhattacharya")
