Indian markets are currently facing challenges, with a 9% decrease from their September peaks. Despite a second consecutive weekly gain, experts believe that the drag on earnings in Q2 is primarily due to oil refining and marketing companies, as well as mutual fund institutions.

The recent downgrades in earnings forecasts, along with foreign outflows and a stronger dollar, have negatively affected investor sentiment. Market analysts suggest that there is unlikely to be a significant rally until corporate earnings growth in India improves. Hemant Shah, a fund manager at Seven Islands PMS, believes that it may take another 2-3 quarters for a substantial recovery, as current valuations are high with equities trading at 14 times FY27 profit estimates. He also mentions that these levels make it unrealistic for foreign institutional investors or mutual funds to make significant returns.

Aishvarya Dadheech, Founder and CIO of Fident Asset Management, shares this sentiment and predicts that the markets will likely remain stagnant for the next month or two, with Q3 results potentially acting as a catalyst for any upward movement.