Why Trideep Bhattacharya is betting on financials and energy despite global uncertainty

India's equity markets may face short-term pressure from the ongoing West Asia conflict, but the broader earnings outlook remains resilient, according to Trideep Bhattacharya, CIO - Equities at Edelweiss Mutual Fund.

Speaking to ET Now, Bhattacharya said the March quarter earnings season has been "fairly robust" despite geopolitical uncertainties, indicating that corporate India entered the current period of volatility in relatively strong shape. However, he expects FY27 earnings estimates to see modest downgrades of around 2-4% as higher oil prices and other external factors weigh on near-term growth expectations.

June quarter mist challenging

According to Bhattacharya, the June quarter is likely to be the most challenging period for Indian companies as the economic impact of elevated fuel prices and a delayed monsoon starts showing up in financial results.


"The fundamentals will get worse before they get better," he said, adding that June could witness the sharpest impact of the West Asia conflict on corporate earnings. Some spillover effects may also continue into the September quarter, depending on how geopolitical developments evolve.

Despite these concerns, Bhattacharya believes a significant portion of the weakness has already been priced into equity markets. He noted that broader markets have corrected between 5% and 10% from their peaks, broadly reflecting expectations of a weak June quarter. Any deterioration beyond current expectations, particularly extending into the September quarter, would be a fresh concern for investors.

Underweight on IT

On the technology sector, Bhattacharya clarified that while his fund house remains slightly underweight on IT stocks, it is far from bearish on the sector. He views artificial intelligence as another major technology transition similar to Y2K, cloud computing and enterprise software adoption.

According to him, Indian IT services firms may not be major beneficiaries during the initial infrastructure-heavy phase of the AI boom. However, their role is likely to become more significant as AI adoption moves deeper into enterprise deployment and implementation.

"We are going through a transition phase of four to six quarters," he said. While AI could reduce the manpower required for certain tasks, it is also expected to create entirely new categories of work and expand the overall scope of technology services.

Financials among most attractive sector

Bhattacharya also highlighted financials as one of the most attractive sectors currently. He expects credit growth, which bottomed out at around 8-10% last year, to accelerate to 14-20% over the next six to 12 months, creating a supportive environment for private sector banks and other financial stocks.

Beyond financials, he sees long-term opportunities emerging from India's push for energy security. The disruption caused by the West Asia conflict has reinforced the risks of excessive dependence on a single energy supply route, making energy independence a strategic priority.

Growth drivers: Capital goods, renewable energy & energy transition

As a result, Bhattacharya remains constructive on capital goods, renewable energy and companies supplying equipment and infrastructure linked to the energy transition. He believes these themes could remain growth drivers for the next three to five years as governments and businesses invest heavily in rebuilding and strengthening energy infrastructure.

For investors, the message is clear: while near-term earnings may face pressure, structural themes such as financial sector growth, energy security and the eventual AI-driven expansion of IT services continue to offer long-term opportunities.