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Earnings Turnaround Could Reverse India's Global Underperformance
17 Nov
Summary
- India not a favorite among EMs due to weak earnings, but could see FII sentiment improve in 12 months
- Edelweiss MF now neutral on IT sector, sees potential upside as earnings bottom out
- Valuation excesses have eased, room for multiples to expand if earnings recover
As of November 17, 2025, Edelweiss MF believes India's global underperformance over the past year could be reversed if earnings turn around. The firm's president and CIO-Equities, Trideep Bhattacharya, noted that India has not been a favorite among emerging markets (EMs) due to weak earnings, but he expects FII (foreign institutional investor) sentiment to improve over the next 12 months once the earnings situation improves.
Bhattacharya, who manages domestic equity funds worth ₹31,092 crore, has been underweight on the IT sector for quite some time but has now shifted to a neutral stance, which he calls a "contrarian call." He hopes Edelweiss MF can "capture the potential upside in the sector" as earnings appear to be bottoming out, and the 12-month outlook looks more constructive.
The article also highlights that valuation excesses have eased over the past 12-18 months, with the Nifty 50 trading at around 20.5 times one-year forward earnings, in line with its long-term average. Similarly, midcaps, which earlier traded at a 25-30% premium, now stand closer to 10-15%. Bhattacharya believes that if earnings recover, there is still room for multiples to expand.
