As India’s benchmark indices hover near record highs amid a mixed global backdrop, investor focus has shifted to the ongoing Q2 FY26 earnings season, which is widely seen as a key test for the market’s resilience and growth narrative. With macro fundamentals improving, government stimulus measures in play, and the Reserve Bank of India maintaining a supportive liquidity stance, optimism around a sustained recovery is building, though tempered by concerns over sectoral divergence and foreign investor outflows.
In an exclusive conversation, BW Businessworld spoke with Rishabh Nahar, Partner and Fund Manager at Qode Advisors, to decode the early trends emerging from corporate earnings, the outlook for liquidity and valuations, and how investors should navigate the festive season. Nahar shares his perspective on India’s evolving market dynamics, long-term sectoral opportunities, and why patient, value-driven investing may remain the winning strategy in the decade ahead.
Edited excerpts:
How do you see the Q2 earnings season shaping up so far? How much impact will government stimulus and RBI liquidity have on the upcoming quarters?
The Q2 earnings season has started on a mixed but encouraging note. The few companies that have already reported have shown healthy growth on both the topline and bottom line, indicating early signs of revival. Markets are beginning to price in this growth momentum, particularly with expectations that the second half of FY26 could see a broader pickup driven by festive demand and government policy support.
India’s economy grew by 7.8 per cent year-on-year in the April–June quarter of 2025, the fastest in five quarters and well above expectations of 6.6 per cent, supported by improving household consumption and government expenditure. With GST rate rationalisation, income tax relief, and ongoing liquidity support from the RBI, macro fundamentals point toward gradual acceleration. However, the rally may remain uneven in specific sectors and companies showing clear earnings visibility will likely outperform broad indices.
Which sectors are you focusing on for short and long-term exposure?
We do not bet on sectors or stocks for the short term but over the longer term, we are optimistic about renewable energy, infrastructure, healthcare and digital technology. India’s transition to clean energy, ongoing urbanisation and digital transformation will likely define the next decade. We take a bottom-up approach identifying companies where earnings recovery is visible and valuations remain reasonable. In a market like this, active stock pickers have a real chance to outperform benchmarks.
FIIs have been net sellers this year, keeping the markets range-bound. How long could this consolidation last?
FIIs remain net sellers in 2025, with outflows of about Rs 1.5 lakh crore so far, though domestic investors have consistently offset this with massive record inflows exceeding Rs 29,000 crore in the month of September 2025. With the Sensex hovering around 83,000, just below its record highs, the broader market remains in a consolidation phase. This phase of stagnation is not necessarily negative, it allows earnings to catch up with valuations.
Predicting FII re-entry is anyone’s guess, but the structural story remains strong. Over the next 12 to 18 months, markets could stay volatile. However, over a five-to-seven-year horizon, India’s economic growth trajectory and corporate earnings potential make the direction of the index an easy call, it will be higher.
Gold and silver have been strong outperformers. What’s your outlook now?
Gold and silver have delivered stellar returns over the past year, and our early call to allocate about 40 per cent of our portfolio to gold has significantly outperformed benchmarks. This rally is not merely technical, it reflects a deeper rebalancing in the global monetary system.
Global central banks now hold a larger cumulative value of gold than US dollar reserves, signaling a gradual shift away from the dollar as the exclusive reserve currency. Gold’s current price near Rs 1.3 lakh per 10 gram and silver around Rs 1.9 lakh per kilogram reflect this structural demand. We remain bullish on precious metals over the next decade but urge investors to treat them as diversification tools and inflation hedges rather than return-chasing instruments.
What’s your message for investors this Diwali season?
Market corrections provide opportunities, not reasons to panic. Whether it’s Diwali, Christmas, or any other occasion, disciplined investors should stay ready to buy high-quality businesses when valuations turn reasonable.
Our philosophy remains simple— focus on growth with value. Markets may not rally uniformly, but companies with earnings visibility and strong balance sheets will continue to outperform. The next decade belongs to investors who stay invested in quality, rather than those who try to perfectly time the market. |
