Key Points

The report noted that "We continue to believe in the domestic investment theme and turn tactically positive on financials. Service exports like IT services and domestic consumption (staples) may continue to be a drag on growth."

The firm underscored that the ongoing capex momentum, coupled with policy support, is expected to provide a boost to investment-linked sectors even as traditional export engines remain subdued.

Antique said the near-term outlook for Indian equities could hinge on the revival of foreign portfolio inflows, which have been weak compared to other emerging markets.

The report observed that "Any resolution in terms of the US penal tariff amidst an improving earnings trajectory may help revive FPI equity inflow into India (weakest within EMs and over the last 2 decades) and likely be a key trigger in the near term."

The brokerage pointed out that global developments, particularly easing US-China trade tensions and policy cues from the Federal Reserve, may influence risk appetite toward Indian markets. It added that India's underlying fundamentals remain resilient, backed by strong fiscal management, benign commodity prices, and improving agricultural prospects.

On corporate earnings, Antique expects a visible turnaround in the second half of the fiscal year. The report projected that "we expect earnings growth to recover in 2H (Nifty 50 and Antique's coverage ex. financial & commodity may grow by 13% and 16% respectively) helped by multiple macro tailwinds like 100 bps interest rate cut, income tax cut for the middle class, GST 2.0, above average monsoon, healthy sowing, lower commodity prices, surplus banking liquidity, and lower risk weight for bank lending."

The brokerage anticipates that these factors will drive broad-based earnings recovery, with financials, infrastructure, and select industrial plays leading the uptrend. The improved fiscal room for capital expenditure, combined with steady government spending on infrastructure, is expected to sustain the investment-led recovery narrative.

At the same time, Antique cautioned that growth headwinds could persist in export-oriented and consumption-heavy sectors. The slowdown in IT services and staples may weigh on aggregate earnings momentum even as cyclical sectors rebound. The firm expects financials to outperform on the back of expanding credit growth, strong asset quality, and policy measures supporting lending.

The report further highlighted that the upcoming festive quarter and rural demand recovery will be closely watched for confirmation of demand revival trends.

Overall, Antique's 2QFY26 outlook strikes an upbeat tone on India's macro resilience and corporate profitability, emphasizing that sustained policy support and domestic investment strength will likely to anchor market performance going forward.

- ANI