Markets are ignoring positives at the current levels: Mohit Bhatia, BOI MF

Revenue growth inching up can pull Indian equities out of consolidation, says MOHIT BHATIA, CEO, Bank of India Mutual Fund, in an email interview with Sirali Gupta. Bhatia believes India is coming out of its slow-growth patch of the past few months, and that the market is particularly ignoring a slew of recent positive developments.

When is the market consolidation phase expected to end, and what could trigger a breakout?

Over the past year, markets have struggled amid weak earnings profiles. While EPS has grown—except in the first two quarters of the last fiscal—this was largely due to margin expansion from cost efficiencies, lower taxes, and input savings, rather than strong revenue growth. Revenue has risen just 6–8 per cent, and unless this improves, consolidation may persist.

 

However, measures like tax cuts, Reserve Bank of India’s (RBI’s) rate reduction and liquidity support, and a likely government salary hike next year could boost demand in the second half of the calendar year, potentially lifting market sentiment.

What is your earnings expectation for Nifty50 companies in FY26?

Nifty50’s earnings per share (EPS) growth rate is expected to be around 12-14 per cent compound annual growth rate (CAGR) over FY25-27, which translates to an earnings per share (EPS) of around ₹1180. The earnings growth will be largely driven by a stable central government, robust corporate balance sheets, and a declining fiscal deficit.

 

Earnings expectations are dependent on the second half and festive season, with tax cuts likely to boost consumer spending. Broadly, the long-term growth story of Indian equities remains intact, making it a potential opportunity for wealth creation.

Are you witnessing any notable sectoral churn in markets? Which sectors could lead the next leg of rally?

In the current earnings season so far, we have not witnessed any major churn since the results declared so far are on the expected line. The next phase of growth can be led by financials.

What is your market outlook for FY26?

India appears to be emerging from its recent slow-growth phase, though markets seem to overlook several positive developments. The RBI has provided strong support through aggressive rate cuts, boosting liquidity. Combined with personal tax cuts, this could aid economic growth.

 

On the global front, potential US tariffs may soon be addressed through trade deals, which could ease market volatility. Supportive macro conditions and a narrowing interest rate premium over earnings yield also favour equities.

 

Meanwhile, a decline in the US Dollar Index (DXY) and India's real effective exchange rate, along with rising FPI debt inflows, signal confidence in India’s macro environment and currency. Q4FY25 earnings rose sequentially, beating low expectations. Still, analysts continue to trim FY26–27 estimates. A meaningful recovery may hinge on new economic data in the next two–three months.