印度策略：触底但催化剂有限

India Strategy: Bottoming but narrow catalysts more than 2x Taiwan.Fast forward just five months into2026, and that lead has evaporatedTaiwanhasalreadyovertakenIndia,whileKorea iswithinstrikingdistance.Theobviousquestion now is whetherIndia can improve its relative position. +6563267643venugopal.garre@bernsteinsg.com +91226 8421482nikhil.arela@bernsteinsg.com quarter saw16%growth versus9% in theprior quarter, with53%of companiesbeating estimates.That said, the strength was largely pre-MENA conflict and driven by aearnings grew just 5-6% in FY26, although the broader NSE-200 constituents deliveredaround 13%.ExpectationsforFY27pointto a pickupformany sectors,but aggregategrowthmoderatestoaround10%, dragged byOMCs. Atthe same time,downgradeshaveresumed, withFY27 estimates cutbyabout 3%so far. Macro support looks thin in the near term. The key swing factor is crude: a de-escalation in the US-lran conflict and a move toward $9O or below would meaningfullyease pressure-supporting bothmarkets and fiscalmath,and allowingcapex plans to stayand current account, eventually feeding into earnings. Even without a geopolitical shock,earnings risks are skewed to the downside, including in sectors often seen as“crude-proof." Apositivemonsooncouldprovideasentimentboost,butfornowweassumea9o%normalmonsoon per IMD.Againstthis backdrop,we aretrimming exposureto consumption-downgrading staples and autos to Underweight given inflation headwinds, limited policyrelatively scarce, we move financials to Equal Weight (banks at Equal Weight, NBFCsslightly Underweight),while maintaining an Overweight on real estate. We are turning more constructive on healthcare and industrials. Healthcare offers aa theme already driving meaningful differentiation and likely to produce winners over thenear to medium term. In energy, we move to Equal Weight overall but upgrade OMCs toOverweight,astheworstofthecrude shock appears behind us andrecentfuel pricehikesprovide a cushion.We retain our Overweight on IT. In summary, while a de-escalation in MENA could trigger a relief rally, we expectit to beshort-lived given weak macro underpinnings and a likely revival in equity issuance. Wemaintain our Nifty year-end target of 26,000 and retain a Neutral stance.From here, returnsare likely to be driven by three themes:(1)under-owned, lower-governance names linkedto global themes suchas Al and data centres,(2)globally exposed sectors like IT andhealthcare,and (3)rebound trades as MENA-related headwinds fade.Within domesticstories, selectivity remains key Earnings have an impactmore than justcurrent multiples.Two years back,even heftierIndia valuations weregetting the justification of being"fair" courtesy earnings growth.With Nifty tracking barely ~5-6% earnings growth for FY2026, much lowervaluations seempricey,as forward growth seems to be shrinking everymonth.In that aspect, Q4 earnings have offered a smallrelief. But does that translate into a story? too, will gradually diminish in impact as the year drags on, and the fiscal position does not augur well for any stimulus beingmarked the first since September 2024 to see single digit growth; the NSE200 stocks sawa relatively impressive~16% growthin the March quarter (Exhibit 1). How do we treat this number? Does this mark a reversal of earnings trends? The headline numbers do indeed give a sense of relief on the first go -this is the strongest earnings quarter of FY2026; ending the year on a positive note, and is broadly returning us to a trendline of mid-to-highteens growth we were at previouslyasfar astheNSE200 stocks are concerned.The full year FY26 now stands a little shy of 14%,and the next FY27expectationsforecastan accelerationformost stocks.The overall earnings thoughslowdownto~10%duetoamassive weighingdown inthe OMCs,which saw a great run till now.Overall, however,10 of the 16 sectors are expected to accelerate in the coming year-the heaviest accelerations being in healthcare, banks, IT and Utilities. On top ofthat, companies beating the estimates haveagain gone past 50% after a dismal Q3 (Exhibit 2). EXHIBIT1:Earningsgrowth(YoY)forNSE200companies eachquarteroverthelast4yearsThe quarter has marked a slight uptick, with NSE200 companies back to a double digit growth (11%) after slipping to 9% in December The first indication that there's more to earnings than meets the eye is if we take the split -it is clearly not secular earningstrend.Theearnings performance is actuallybetterdown the curve-Nifty continues to show signs of modest growth, with 6%growth in Q4 (Exhibit 3).Next50at 25%andthoseoutside the top 100 (101-205 inour list ofNSE200 members)at 35%Without SMiD support,the largecaps have registered an 11.8% growth in the March quarter,stll faster than thelastone but nota dramatic increase,and slowerthan June quarter of the same financial year. ATEMPORARYBUMPVSASTRUCTURALSTORY? So what exactly is at play here? A simple analysis is provided in Exhibit 4, which shows two types of trends