Corporate India is poised to build on the momentum from the previous quarter as it begins unveiling financial results for the October-December period of the fiscal year 2025-26 (Q3FY26). Analysts project a steady performance, with companies in key indices and beyond showing varied growth trajectories, driven largely by festive demand and recent policy tailwinds.
Brokerage Projections: A Mixed Bag Across Indices
Leading brokerage houses have released their estimates for the quarter, painting a picture of selective growth. Kotak Securities, Motilal Oswal Financial Services (MOFSL), Axis Securities, and Emkay Global Financial Services collectively indicate that Nifty 50 companies could report net profit growth of up to 8.8% for Q3FY26. In comparison, the 30 stocks that constitute the Sensex are anticipated to show a slightly more modest net profit growth of 6.1%.
However, the story becomes more compelling when looking beyond the benchmark indices. For instance, Kotak Institutional Equities expects its coverage universe of nearly 300 companies to announce a healthier 8.8% profit growth, outperforming its Sensex projection. Similarly, MOFSL estimates a significant 16% net profit growth for its covered 345 companies, marking an eight-quarter high, starkly contrasting the 8% growth forecast for Nifty constituents. Emkay Global's report aligns with this trend, projecting the BSE500 companies to register a 14% net profit growth against Nifty's expected 8.5%.
Sectoral Divergence: Consumer Boom vs. IT & Banking Mutedness
The sectoral performance is expected to be highly uneven. Analysts highlight that FMCG, consumer durables, and consumer discretionary companies are likely to post strong quarterly numbers. This surge is primarily attributed to the goods and services tax (GST) rate cuts implemented in September, which boosted consumer spending during the crucial festive season.
Emkay Global noted in its report, "We see a pickup in earnings and turnaround in Q3FY26 breaking the last six-quarter consolidation... A pick-up in festive season demand, coupled with GST rate-cut tailwinds, drove the strong discretionary earnings, leading to 14.5% PAT growth." Their analysis shows the Emkay universe delivering a top-line growth of 10.7% year-on-year in Q3FY26, a sharp recovery from 5.6% in Q2FY26.
On the flip side, the banking and information technology (IT) sectors are expected to report muted net profit growth for the just-ended quarter. Additionally, some pharmaceutical companies are projected to face pricing challenges, potentially leading to lower growth numbers.
Market Outlook: Consolidation and Selective Opportunities
Looking ahead, analysts believe the earnings momentum is set to accelerate as downside risks appear limited. However, the market rally may not be broad-based. A report by Axis Securities suggests that Q3FY26 results will likely reinforce a phase of consolidation, with opportunities being stock and sector-specific rather than indicating a widespread market upswing.
Consequently, market breadth is anticipated to remain narrow in the near term. Investors are expected to favour companies with strong balance sheets, visible earnings momentum, and pricing power. The overall sentiment is cautiously optimistic, with a clear directional shift in market growth contingent on earnings momentum broadening and sustaining across more sectors.
As Axis Securities summarized, "Overall, while downside risks appear increasingly contained, a clear directional shift in market growth is likely only once earnings momentum broadens and sustains, potentially setting the stage for a healthier expansion in the latter part of CY26."
