India Inc Primed For Double-Digit Earnings Growth In 2026, Says Nomura Analyst
Talking about India valuations, Sheth argued that while absolute premiums remain elevated, India's valuation has improved on a relative basis.
India Inc. is expected to take cues from improving corporate earnings at the end of the year to post higher growth heading into the first half of 2026, according to Chetan Sheth, APAC Equity Strategist at Nomura.
Sheth explained why Nomura remains constructive on Indian equities even at a time when foreign investors have appeared tentative to enter the Indian markets.
“We have a constructive view on equities in the early parts of the year, with the main reason being strong earnings growth expected in 2026," Sheth told NDTV Profit.
The Nomura analyst believes India will be one of four economies to post double-digit earnings growth heading into 2026, although he did warn that the second half the year could see challenges.
"The four big markets in Asia, which include India, will see double-digit earnings growth. Maybe in the second half, there will be more challenges for stocks. But generally, we are quite constructive," he said.
A key concern for foreign investors has been the high valuation of the Indian stock market.
Talking about India valuations, Sheth argued that while absolute premiums remain elevated, India's valuation has improved on a relative basis.
“India valuations remain quite elevated. Valuations in an absolute sense have not come off. But relative valuations, which are India against the entire region, look far more attractive to us," he said.
Sheth added how India's valuations have considerably improved against Asia ex-Japan, especially since Sept. 2024, when the correction started taking place.
"India is trading at a premium of around 56-58% premium to Asia ex-Japan. Historically, this premium has been around 50% levels. Back in September 2024, when Indian markets started underperforming, this gap was 100%," he explained.
Finally, Sheth stated that the road ahead looks bright for Indian equities, especially amid support from a recovering economy and favourable policies.
"We think Indian equities will be a big diversifier for regional portfolios. We also have support of earnings, and we also think policies have been quite supportive. Going forward, we are expecting a cyclical recovery both on the economic side and the corporate earnings side," he concluded.
