Sivaram said the biggest reason for India’s underperformance is simple: very weak earnings growth. For six consecutive quarters, earnings have grown only in single digits. This has directly reflected in market returns. He believes if earnings comes back, everything will fall into place.
However, he expects earnings to bounce back strongly, “In FY27, we expect 15–18% earnings growth,” he said. With stronger quarter three results likely early next year, he believes the market could start recovering from January–February 2026.
Sivaram also sees a structural shift in policy that could support growth. He argues that both the government and the Reserve Bank of India have recognised the drag from low nominal GDP.
Recent steps such as GST cuts, rate cuts and a more open stance on capital flows into the financial sector indicate a coordinated effort to revive consumption and, eventually, private capex. Companies, he says, invest only when they see demand, and the latest policy moves could break the long-standing cycle of weak consumption and cautious capex.
On sector preferences, Sivaram remains positive on financials, saying lower interest rates for an extended period will support banks and NBFCs. He also expects high-end consumption to stay strong, especially in autos, travel, hospitality and premium discretionary categories, though rural demand continues to lag because of low food prices.
Pharmaceuticals also stand out for him due to several bottom-up opportunities emerging across the sector. E-commerce, however, remains mixed in his view, with some companies looking attractive after recent corrections while others still appear expensive.
Sivaram is cautious about the ongoing rush of IPOs. He says Enam largely avoids new issues because valuations are often high and the promised growth does not always materialise.
Mutual funds are also facing a supply–demand mismatch, where inflows are not keeping pace with the flood of IPOs, forcing them to sell existing stocks to participate. He believes IPO supply will eventually cool once the market starts seeing underperformance from newly listed names.
For the entire discussion, watch the accompanying video
