By Bharath Rajeswaran
(Reuters) – Improving sequential quarterly earnings at top Indian firms such as Reliance Industries and Larsen & Toubro has eased concerns over earnings pressure, with analysts forecasting a likely fundamentals-driven rebound in Asia’s third-largest economy on renewed investor confidence.
Three consecutive quarters of weak earnings contributed to the benchmark Nifty 50’s nearly 9% decline between October and March. However, strong March-quarter results and easing global headwinds helped the index gain 5.5% so far in fiscal 2026.
Bernstein pointed out that the beat ratio – the share of companies that report better-than-estimated results – among NSE 100 firms is at 51%, its highest since mid-2023, a sign of a turnaround for Indian corporates. That number stood at around 40% in the past five quarters.
“We have successfully avoided the worst-case earnings projections that resulted from continuous (earnings) downgrade revisions since September last year,” said Bernstein analysts Venugopal Garre and Nikhil Arela.
Brokerage Motilal Oswal reported stronger-than-expected earnings growth from the companies it covers, and Morgan Stanley noted broad-based revenue and profit outperformance across key sectors such as communication, healthcare, and industrials.
RESILIENCE AHEAD
Bernstein is projecting a 15% earnings growth for the top 100 NSE stocks in the ongoing fiscal year 2026, with momentum expected to pick up in the second half.
Improved liquidity, potential rate cuts, higher government spending, and benign commodity prices create a supportive backdrop for earnings outlook for fiscal 2026, according to analysts.
However, the recovery is likely to be gradual, with potential pressure from slowing credit growth in banks and uneven consumption trends, they noted.
Unlike fiscal 2025, when concerns surfaced mid-year, risks of trade war and bank margin pressures are already priced into fiscal 2026 earnings forecasts, said Mahesh Nandurkar of Jefferies, adding that earnings are likely to prove more resilient in fiscal 2026 as a result.
The March-quarter beat ratio for the companies in Jefferies’ coverage rose to 41% – a three-quarter high.
SECTORAL SNAPSHOT
Index heavyweight Reliance Industries reported strong results, led by retail and telecom segments, while Larsen & Toubro – among the top 10 heaviest-weighted firms in the Nifty 50 – beat estimates and forecast higher fiscal 2026 margins on strong order inflows.
Private banks such as ICICI Bank and HDFC Bank powered ahead, offsetting softer numbers from Kotak Mahindra Bank
Non-lending financials – insurers and capital market players – also beat analyst expectations.
IT firms, on the other hand, struck a cautious tone as global trade jitters and uncertainty over the U.S. economy weighed, given the sector’s high exposure to the geography.
In the consumer space, it was a tale of two halves. Staples majors Hindustan Unilever and Nestle India wrestled with tepid volumes and rising costs, while durables companies such as Havells India and RR Kabel lit up with strong growth, helped by steady demand.
(Reporting by Bharath Rajeswaran in Bengaluru; Writing by Indranil Sarkar; Editing by Janane Venkatraman)
