“If I were to go back, I think we saw the worst from a market standpoint and from a shock perspective… was more like the September quarter,” Badshah said in an interview with CNBC-TV18. Since then, estimates have been revised lower, and the market is entering the March quarter with relatively more realistic expectations.
He added that while Q4 results are unlikely to deliver any major upside surprise, “the market will take comfort if there are no further downgrades.”
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However, Badshah does not expect a return to earnings upgrades just yet. Domestic growth drivers, including infrastructure activity and policy momentum, are beginning to shape up, but will take a few quarters to reflect in company performance.
As investors reassess market leadership, Badshah remains constructive on domestic-oriented sectors. “Whether it be industrials, some parts of consumer discretionary, parts of real estate… these are the ones which we can probably go to at this stage,” he said, adding that these areas still offer growth ahead of the broader system.
He also sees opportunities emerging in sectors that are making a cyclical comeback. “Value consumption at one level seems to be making some sort of a comeback,” he noted, pointing to early signs of improvement in rural demand and a promising monsoon outlook.
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Pharma is another area he prefers, particularly mid-sized contract development and manufacturing organisations (CDMOs) and domestic-focused players. “Some parts of the pharma sector… are probably going to be able to weather it better,” he said, adding that these companies could demonstrate “growth in the vicinities of the 20s over the next two, three years.”
On the other hand, Badshah is cautious on the IT sector. While valuations look reasonable, growth uncertainty, weak guidance, and tariff risks are weighing heavily. “The only argument that probably can be made to work for the IT companies is their valuations… from a free cash flow yield or an earnings yield perspective,” he said.
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In the near term, he expects the market to remain range-bound and earnings visibility to be limited. “It will require a certain amount of patience from investors to see some of these actions… translate into growth,” he said.
