Indian stock market benchmarks Sensex and Nifty 50 have continued their impressive upward trajectory, defying bearish predictions as second quarter earnings for FY26 reveal surprising strength across corporate India. The resilience demonstrated by companies has provided solid foundation for the market's sustained performance.
Earnings Momentum Drives Market Confidence
According to Nithin Kamath, Founder & CEO of Zerodha, the better-than-expected Q2 results represent a primary factor behind domestic equities outperforming most pessimistic forecasts. In his social media analysis, Kamath highlighted that data from over 3,500 companies indicates a broad-based recovery spanning multiple sectors.
The comprehensive data reveals aggregate revenues growing 8.2% year-on-year, while more significantly, EBITDA increased 14.1% and profit after tax (PAT) surged 16.0%. When excluding financial services, the profit growth accelerates dramatically to 22.5%, driven predominantly by margin expansion rather than pure volume growth, as reported by IndiaDataHub.
"Perhaps this explains why indices are holding up much better than most bears had expected. Hoping this earnings strength sustains," Kamath commented on the encouraging trends.
Sector-Wise Performance Breakdown
The commodities sector delivered one of the most powerful performances this earnings season, with sector profits skyrocketing 44.1% and revenue climbing 13.4%. Metals and mining giants including Tata Steel, Lloyds Metals and Jindal Stainless drove this surge, benefiting from improved realizations, volume growth and product mix enhancements. The fertilizers segment, however, presented mixed results according to the data.
Energy emerged as another major profitability driver, recording nearly 52% growth in PAT. Gandhar Oil posted notably clean improvements this season, while ONGC delivered substantial profit growth despite flat revenues. Meanwhile, Gujarat Gas and Indraprastha Gas (IGL) faced a more challenging quarter.
Healthcare maintained its multi-week outperformance streak with profits up 16% and revenue increasing 13%. Selected pharmaceutical companies achieved margin improvements through enhanced global product sales and more efficient API operations.
Industrials posted another balanced week with profits rising 18.7%, led by defense and engineering segments. Bharat Dynamics saw revenue more than double, while KEC International reported nearly doubled profits. Syrma SGS Technology demonstrated strength, though traditional EPC names like Afcons and Cochin Shipyard experienced margin pressure. Hindustan Aeronautics and Ashok Leyland delivered steady but slightly softer performance due to cost pressures.
Consumer Segments Show Mixed Results
Consumer Discretionary segment recorded 17.5% profit growth, though performance varied significantly within the category. Hero MotoCorp and PN Gadgil capitalized on festive demand and improved margins, while Asian Paints converted modest revenue growth into substantial profit gains. Conversely, Voltas suffered from weak summer demand and higher costs, and Welspun Living felt the impact of US tariffs and soft global demand.
The FMCG sector showed 10% revenue growth but only 1.7% profit increase, indicating persistent margin pressure even among companies with strong top-line performance.
Financial Services maintained consistent performance with 6.2% profit growth, aligning with the season's stable tone. Telecommunications delivered the most dramatic statistical improvement with profits soaring 143%, though this primarily resulted from reduced finance costs and stabilizing operational bases.
Services sector grew revenue by 14% but saw PAT remain almost flat, affected by freight softness and integration-related challenges. Utilities experienced a 17% profit decline, reflecting cost pressures and comparison against last year's high base.
Margin Expansion Drives Profitability
The overarching theme emerging from this earnings season clearly indicates that profitability is being propelled more by margin gains, cost control measures and product mix upgrades than by headline revenue growth. Even in segments experiencing patchy demand, disciplined execution has helped maintain India's earnings cycle on solid footing.
The robust earnings performance has provided fundamental support to Indian equities, explaining why the markets have resisted downward pressure despite global uncertainties and bearish projections. As corporate India demonstrates its resilience through operational efficiency and strategic management, investors remain watchful for sustainability of this earnings momentum.
