India’s Equity Markets Poised for Growth in 2026: Edelweiss Mutual Fund

After a year of consolidation, India’s equity markets appear poised for a fresh leg of growth, says Trideep Bhattacharya, President & CIO-Equities at Edelweiss Mutual Fund. With valuations normalizing and earnings momentum improving, he believes 2026 could mark the start of an earnings upgrade cycle, led by domestic consumption, financials, and government-driven infrastructure themes.

Edited excerpts from a chat:

How is Edelweiss Flexi Cap Fund navigating the current market volatility given stretched valuations and intermittent global headwinds?

2025 has been a year defined more by time correction than outright price correction-a phase that has quietly allowed market valuations to normalize closer to long-term averages. The backdrop,though,hasn’t been easy.Global headwinds-geopolitical uncertainty, uneven commodity cycles, and intermittent bouts of rate volatility-have kept risk sentiment oscillating.

Against this environment, our strategy has been anchored in staying invested in India’s structural growth opportunities while maintaining prudent liquidity buffers. We continue to emphasize companies with strong balance sheets,visible cash flows,and pricing power-businesses that can absorb volatility without compromising long-term value creation.

Our portfolio stance of being overweight domestic-demand sectors and underweight global cyclicals has worked well in this stop-start environment. Domestic-facing businesses-in consumption, financials, and infrastructure-offer greater earnings visibility, while global cyclicals face uncertainties around external demand and commodity swings. This disciplined positioning has helped the fund navigate volatility while ensuring readiness for the next leg of the earnings cycle.

With India remaining one of the fastest-growing major economies, what sectors are you most constructive on for 2026?

With India positioned as one of the fastest-growing major economies, we are constructive on sectors most aligned with domestic growth drivers:

• Consumer discretionary remains a key overweight, supported by improving real incomes, GST rationalisation, and a likely pickup in high-value consumption.
• Rate-cut beneficiaries-such as real estate and