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Jefferies: Indian Market Recovery Imminent
23 Nov, 2025
Summary
- Earnings downgrades have narrowed, signaling the worst of the slowdown is over.
- FY26 earnings growth expected at 10%, with FY27 projected at 15-16%.
- Banks, autos, and telecom sectors are anticipated to drive significant rebound.
The Indian equity market is poised for a recovery, with earnings downgrades significantly narrowing, indicating that the economic slowdown is subsiding. A challenging first half of FY26, marked by weather, GST, and rate cut impacts, has given way to underlying earnings resilience.
Jefferies projects earnings growth of approximately 10% for FY26, with a more robust 15-16% expected in FY27. This upward revision is supported by a moderation in the size of downgrades and anticipated strength in key sectors. Banks are expected to be a primary driver, alongside improvements in auto and select consumer discretionary segments.
Sectors like power and cement are also positioned for recovery, with Jefferies forecasting substantial earnings growth in cement and telecom. Improving macroeconomic conditions, including a low current account deficit and strong FDI, further bolster corporate earnings, suggesting a constructive phase for Indian equities.
