Are the Indian markets past the worst? Here's Macquarie’s Sandeep Bhatia expert analysis

Indian markets are now at the lower end of their range and may have moved past the worst of the recent negative news and market pressure, according to Sandeep Bhatia, Managing Director and Head of Equity India at Macquarie Capital.

Bhatia, however, said the outlook remains sensitive to two key risks — oil prices and US tariffs. “We are at the lower end of the range,” he said, adding that India has “definitely gone past the worst in terms of the negative news and margin and market pressure.”

Have Indian Markets Withered The Worst?

Foreign investor sentiment has improved at the margin, but it is still not a full-fledged conviction call on India. Bhatia said interest rates in both India and the US remain a headwind, while India is also yet to benefit from the stronger global preference for hardware and artificial intelligence (AI)-related themes.

Despite these concerns, Bhatia expects India’s earnings to positively surprise in the current quarter, the July-September quarter of 2026 (Q2FY27). He did not provide a market-wide earnings estimate versus consensus but highlighted banking as one sector where the outlook is improving.



The banking sector has been among the most beaten-down parts of the market. Bhatia expects margins to expand and stocks to re-rate over the next two years, even though there could be some near-term earnings pressure. “Come 27, 28, next two years, banks will show good earnings,” he said.

On Financials

He also sees large-cap valuations as more reasonable at current levels, while remaining cautious about valuations in the small- and mid-cap space.

Bhatia sees the growing financialisation of Indian savings as a major opportunity. He estimates India’s financial savings at over $500 billion and expects the pool to grow further. He likes businesses that can benefit from this trend, including Multi Commodity Exchange of India (MCX), BSE and National Stock Exchange of India (NSE).

Beyond financials, Bhatia expects consumer-durable consumption to deliver positive surprises. He highlighted auto companies including

Hyundai India, Maruti Suzuki India

and Mahindra and Mahindra, saying auto sales have been strong during the festival season.



The power and energy space remains another area of interest. Bhatia highlighted Clean Max Enviro Energy Solutions as an interesting play on renewable energy and also likes power equipment and transmission companies such as Hitachi Energy India. The opportunity, he said, is being driven by more than just AI-related power demand, with strong industrial and manufacturing growth in India also expected to support the sector.

Bhatia remains cautious on IT despite finding valuations interesting. He does not yet have enough conviction to buy the sector and wants to see how the AI theme plays out in the West. The IT sector, along with banking, has borne the brunt of recent selling, particularly because it is well owned by foreign investors. Bhatia expects further pressure until there is greater clarity on the impact of AI.

On insurance, Bhatia said regulatory changes remain a key concern. He remains cautious on PB Fintech (Policybazaar) and wants to wait for the Insurance Regulatory and Development Authority of India (IRDAI) draft recommendations to be finalised before taking a call on the sector.

Watch the full conversation here



For India more broadly, Bhatia said investors are looking beyond tax changes. He believes the focus needs to remain on the underlying economy, industrial structure and corporate governance. Recent boardroom battles, he said, have also created a negative perception among investors.

For India to sustain its growth opportunity, Bhatia believes the country needs continued progress in manufacturing and services, along with a well-governed political and corporate environment.



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