According to Prasad, much of the earnings growth expected for FY26 is coming from just a few sectors—metals, oil and gas, and telecom. But these gains are driven by one-off policy factors. “It’s got nothing really to do with the performance of the economy,” he said.
He also doesn’t see a major boost to consumption, despite recent rate cuts from the Reserve Bank of India. While rural recovery and tax relief may help at the margin, the overall impact on household spending is likely to be limited. Fiscal support, which looked possible a few weeks ago when oil prices were lower, now seems unlikely as crude climbs again.
On the investment side, Prasad flagged a slowdown in government capex and said earlier hopes of stimulus have faded. At the same time, he expressed concern over speculative rallies in certain pockets of the market, especially stocks driven more by narrative than numbers.
He questioned investor excitement in areas like railway stocks despite flat budgets and stretched valuations.
Still, he remains constructive on the BFSI space, particularly private and public sector banks, where he believes earnings visibility is stronger and valuations remain reasonable. For now though, he suggests investors look past the surface and examine what’s really driving market gains.
