LGT's Rajesh Iyer: Earnings Surge in Broader Markets, IT AI Panic 'Exaggerated'

• Mid and small-cap stocks show strong earnings recovery, outperforming expectations in Q3FY26.
• BSE 500 expected to outpace large caps over medium to long term, with stronger growth projected for FY27.
• Concerns about AI undermining IT services are overstated; core IT services remain essential for AI implementation.
• Earnings recovery is underway, with modest boost to FY26 estimates and stronger double-digit EPS growth expected in FY27.
• Defense sector remains attractive with significant capital outlay and policy focus on modernization.