Overview
- Edelweiss advises investors to gradually increase exposure to Indian equities from a medium-term perspective.
- It points to early signs of an earnings-upgrade cycle that could support a more durable rally, with large caps near 20x earnings and mid/small caps around 24–27x.
- Financials, consumer discretionary, defense, and IT are highlighted as likely leaders if earnings and liquidity trends hold.
- The biggest cited risk to equities in 2026 is economic fallout from unresolved global tariffs.
- Near-term sentiment cues include progress on an India–US trade deal, clarity on the 8th Pay Commission, and the trajectory of domestic liquidity and earnings revisions.