Consumption set for comeback: Travel, autos, durables to lead 24-month upswing: Vaibhav Sanghavi

Even as the equity markets consolidate after hitting record highs, the medium-term outlook remains firmly positive on the back of improving earnings momentum, stabilising macro indicators and a strong consumption recovery, says Vaibhav Sanghavi, CEO, ASK Hedge Solutions.

Speaking to ET Now, Sanghavi said the recent market breadth may appear “slightly uncomfortable,” but underlying trends signal a constructive phase ahead.

“After four quarters, we finally saw EPS upgrades last quarter. Corporate commentaries are also pointing to a stronger second half of FY26,” he said.

Earnings cycle strengthening; FY27 growth seen at 14–15%

According to Sanghavi, the return outlook improves significantly when earnings visibility strengthens.
“If on a consensus basis we grow earnings by 14–15% in FY27, the power of earnings is strong enough to keep markets supported,” he said.

The only missing piece, he noted, is a sustained recovery in foreign portfolio investor (FPI) inflows.
“As earnings grow, FPI flows should eventually follow. That is the last piece that needs to fall in place,” he added.

Rupee volatility, IPO supply creating near-term pressure

On the recent market dip and volatility, Sanghavi attributed much of the weakness to fluctuations in the rupee.
“The latest round of volatility is partly due to volatility in the Indian rupee (INR). Once that stabilises, markets have the broader economic and earnings matrix in place to inch higher,” he said.
He also highlighted that the surge in IPOs and capital raising is temporarily absorbing liquidity.
“Large capital raises always soak up market liquidity. Combined with FPI hesitancy, that creates short-term pressure,” he noted.

Consumption cyclical rebound underway

Sanghavi remains bullish on India’s consumption cycle, supported by GST cuts, monetary easing and government spending.

“Consumption hasn’t done much for years. But over the last 12 months, the Centre, states and RBI have taken consistent measures to boost household spending,” he said.

He expects the consumption revival to sustain for 12–24 months, led initially by discretionary segments.

Sectors likely to benefit first

• Travel & tourism
• Consumer electronics and durables
• Automobiles
• Other experience-driven categories
• Staples are expected to pick up later in the consumption cycle.

Overall outlook: Medium-term trend “very constructive”

“We have stable macros, improving earnings, and policy support. Medium to long term, markets look very constructive,” Sanghavi said, adding that structural themes remain intact despite the near-term noise.