Raychaudhuri said India’s corporate earnings growth is likely to remain in single digits in the fiscal year 2026-27 (FY27), marking a third consecutive year of subdued expansion. He argued that improving private investment and attracting higher levels of foreign direct investment (FDI) will be critical for reviving growth and investor sentiment.
The market strategist said India continues to trade at relatively high valuations despite weaker earnings expectations, creating a challenge for investors when compared with markets such as South Korea and Taiwan, where earnings forecasts have been rising.
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Raychaudhuri said investors should now focus on stock-specific opportunities rather than broad market exposure. He identified capital goods, defence, selected consumer discretionary businesses and metals as sectors that could offer opportunities despite the broader earnings slowdown.
“One would have to navigate the Indian market on a stock-by-stock, on a very close business, stock selection basis,” he said.
Among Indian sectors, Raychaudhuri highlighted metals as one of the few areas offering both earnings growth potential and reasonable valuations. For investors with a longer investment horizon of three to five years, he also remains constructive on private sector banks and large industrial companies.
Raychaudhuri noted that private banks continue to gain market share and are trading at valuations below historical levels. He also expects leading industrial and capital goods companies to benefit from global infrastructure rebuilding and supply-chain diversification efforts.
He maintained a cautious stance on technology stocks. He said he has avoided Indian IT stocks for more than a year and believes uncertainty around global demand and artificial intelligence (AI) could continue to affect earnings visibility.
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However, he identified Tech Mahindra as one Indian IT company that appeared attractive based on earnings growth forecasts, valuation metrics and balance-sheet strength.
Beyond India, Raychaudhuri said investors should consider international diversification, particularly in AI-related opportunities across Asia. He remains positive on companies such as SK Hynix, Samsung Electronics and TSMC, arguing that demand for computing power and memory chips is likely to increase as adoption of artificial intelligence expands.
“As we move from inference-based AI to agentic AI, the number of tokens that you would need would grow exponentially,” he said.
According to Raychaudhuri, the rising demand for AI infrastructure should continue to support semiconductor and memory-chip manufacturers, making them key beneficiaries of the global AI investment cycle.
For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here