Nifty Q3 results: Earning upcycle to steer FY26 EPS; IT, autos, financial stocks in focus
JM Financial forecasts a profit after tax (PAT) increase of 9.8% year-on-year for Nifty50 in Q3FY26, driven by IT services, automobiles, metals & mining, telecom, and industrials.
- Jan 12, 2026,
- Updated Jan 12, 2026 10:09 AM IST
JM Financial forecasts a profit after tax (PAT) increase of 9.8% year-on-year for Nifty50 in Q3FY26, driven by IT services, automobiles, metals & mining, telecom, and industrials. Steps taken to to boost consumption through income tax cuts, interest rate cuts, an increase in banking system liquidity and GST rate reduction will support the consumption theme, it said.
The brokerage states: "For the JM Financial universe, we forecast PAT growth of 12.3% YoY in 3QFY26E. Ex-BFSI, we reckon growth would be 17.8% YoY. Furthermore, we expect Nifty 3QFY26E PAT to grow 9.8% YoY (ex-BFSI growth expected to be 16.2% YoY). After delivering 9.5% growth in 1Q and 8.4% in 2Q, Nifty50 would deliver YoY PAT growth of 9.8% in 3Q in our view, driven by: i) IT Services (12% weight in Nifty50 earnings), likely to increase 10% YoY; ii) Auto (6% weight in Nifty50 earnings), to accelerate 33% YoY; iii) Metals & Mining (5% weight in Nifty50 earnings), to rise 25% YoY; iv) Telecom (3% weight in Nifty50 earnings), to surge 64% YoY; and v) Industrials (4% weight in Nifty50 earnings), expected to jump 31% YoY."
2026 should be India’s comeback year, aided by a cyclical consumption recovery, said Emkay Global Financial Services. It expects FY27 Nifty EPS to bounce back to 14%, accompanied by a broad-based earnings recovery. This should help turn the tide on flows, and expects positive outcomes on domestic and overseas flows – after a rough 1QCY26.
Excluding BFSI, Nifty50 PAT is projected to rise 16.2% YoY, and ex-BFSI and oil & gas growth is seen at 20.5%. The JM Financial universe is set to deliver 12.3% YoY PAT growth, with ex-BFSI up 17.8% and ex-BFSI and oil & gas up 19.3%. Key sectors include oil & gas (16% weight), IT services (11%), auto (6%), metals & mining (4%), and industrials (3%), all expected to post strong double-digit growth.
FY27 market narrative is increasingly earnings-driven, with little room for valuation-led upside. Nifty 50 EPS is set to rebound 17% YoY in FY27E after a soft FY26 base, but at 20.1x forward P/E—near the upper end of its historical range—scope for expansion appears limited. Market upside rests on the breadth and resilience of earnings, both of which are improving, said Elara Capital.
JM Financial highlights the impact of government and RBI initiatives to spur demand: "Bullish on consumption: The Government of India and the RBI have taken steps to boost consumption through income tax cuts, interest rate cuts, increased banking system liquidity and GST rate reduction. Taking cognisance of this, we rejigged our model portfolio and increased our overweight on: i) consumer; ii) internet; iii) auto; and iv) hotels & real estate." This reflects a tilt in the brokerage’s model portfolio towards sectors with direct consumption exposure.
On capital flows, the brokerage notes: "Domestic flows positive in 3QFY26, but FIIs continue to be net sellers: In 3QFY26, DIIs were net buyers of Indian equities to the tune of USD 23.6bn, whereas FIIs offloaded Indian equities worth USD 1.3bn—attributable to a large quantum of selling in Dec’25. YTFY26 too, the trend remains similar with DIIs being large buyers (USD 68.5bn) and FIIs net sellers (USD 6.2bn). While FIIs were net buyers in 1QFY26 to the tune of USD 4.6bn, they were net sellers in 2Q and 3Q to the tune of USD 10.8bn. DIIs have remained net buyers in each month of FY26 so far."
JM Financial positions the Nifty50 for continued earnings momentum, with sectoral rotation and supportive domestic flows shaping its investment strategy. The sharpest advances are likely in IT, auto, telecom, and metals & mining, while consumption themes remain in focus following recent policy measures.
The unresolved India-US tariff dispute remains a key overhang, particularly for exports-facing sectors. While its earnings impact is limited, lack of progress could pressure valuation and delay FII flows normalization, Elara said. It favours sectors backed by operating leverage and policy tailwinds as automobiles and discretionary consumption remain top picks.
"We prefer NBFCs and large Private Banks, supportive easing, and liquidity cycle, with favourable demand dynamics. In energy, downstream OMC offer underappreciated earnings momentum and strong cashflow. We retain our constructive view on premium residential real estate, where pricing and absorption remains firm. We tactically favour IT Services," it added.
"Our three key themes are Autos, Internet/new age businesses, and SMID lenders," Emkay said, adding Lenskart, Tata Motors CV, RBL, HDFC Bank, Craftsman Automation, Larsen and Toubro, Hexaware to its model portfolio and replacing TVS, Max Healthcare, Indigo, Kajaria Ceramics, Coforge, Radico Khaitan, Ultratech Cement Lenskart, Eternal, Tata Motors CV, IDFC First Bank & Shriram Pistons are its top picks.
JM Financial forecasts a profit after tax (PAT) increase of 9.8% year-on-year for Nifty50 in Q3FY26, driven by IT services, automobiles, metals & mining, telecom, and industrials. Steps taken to to boost consumption through income tax cuts, interest rate cuts, an increase in banking system liquidity and GST rate reduction will support the consumption theme, it said.
The brokerage states: "For the JM Financial universe, we forecast PAT growth of 12.3% YoY in 3QFY26E. Ex-BFSI, we reckon growth would be 17.8% YoY. Furthermore, we expect Nifty 3QFY26E PAT to grow 9.8% YoY (ex-BFSI growth expected to be 16.2% YoY). After delivering 9.5% growth in 1Q and 8.4% in 2Q, Nifty50 would deliver YoY PAT growth of 9.8% in 3Q in our view, driven by: i) IT Services (12% weight in Nifty50 earnings), likely to increase 10% YoY; ii) Auto (6% weight in Nifty50 earnings), to accelerate 33% YoY; iii) Metals & Mining (5% weight in Nifty50 earnings), to rise 25% YoY; iv) Telecom (3% weight in Nifty50 earnings), to surge 64% YoY; and v) Industrials (4% weight in Nifty50 earnings), expected to jump 31% YoY."
2026 should be India’s comeback year, aided by a cyclical consumption recovery, said Emkay Global Financial Services. It expects FY27 Nifty EPS to bounce back to 14%, accompanied by a broad-based earnings recovery. This should help turn the tide on flows, and expects positive outcomes on domestic and overseas flows – after a rough 1QCY26.
Excluding BFSI, Nifty50 PAT is projected to rise 16.2% YoY, and ex-BFSI and oil & gas growth is seen at 20.5%. The JM Financial universe is set to deliver 12.3% YoY PAT growth, with ex-BFSI up 17.8% and ex-BFSI and oil & gas up 19.3%. Key sectors include oil & gas (16% weight), IT services (11%), auto (6%), metals & mining (4%), and industrials (3%), all expected to post strong double-digit growth.
FY27 market narrative is increasingly earnings-driven, with little room for valuation-led upside. Nifty 50 EPS is set to rebound 17% YoY in FY27E after a soft FY26 base, but at 20.1x forward P/E—near the upper end of its historical range—scope for expansion appears limited. Market upside rests on the breadth and resilience of earnings, both of which are improving, said Elara Capital.
JM Financial highlights the impact of government and RBI initiatives to spur demand: "Bullish on consumption: The Government of India and the RBI have taken steps to boost consumption through income tax cuts, interest rate cuts, increased banking system liquidity and GST rate reduction. Taking cognisance of this, we rejigged our model portfolio and increased our overweight on: i) consumer; ii) internet; iii) auto; and iv) hotels & real estate." This reflects a tilt in the brokerage’s model portfolio towards sectors with direct consumption exposure.
On capital flows, the brokerage notes: "Domestic flows positive in 3QFY26, but FIIs continue to be net sellers: In 3QFY26, DIIs were net buyers of Indian equities to the tune of USD 23.6bn, whereas FIIs offloaded Indian equities worth USD 1.3bn—attributable to a large quantum of selling in Dec’25. YTFY26 too, the trend remains similar with DIIs being large buyers (USD 68.5bn) and FIIs net sellers (USD 6.2bn). While FIIs were net buyers in 1QFY26 to the tune of USD 4.6bn, they were net sellers in 2Q and 3Q to the tune of USD 10.8bn. DIIs have remained net buyers in each month of FY26 so far."
JM Financial positions the Nifty50 for continued earnings momentum, with sectoral rotation and supportive domestic flows shaping its investment strategy. The sharpest advances are likely in IT, auto, telecom, and metals & mining, while consumption themes remain in focus following recent policy measures.
The unresolved India-US tariff dispute remains a key overhang, particularly for exports-facing sectors. While its earnings impact is limited, lack of progress could pressure valuation and delay FII flows normalization, Elara said. It favours sectors backed by operating leverage and policy tailwinds as automobiles and discretionary consumption remain top picks.
"We prefer NBFCs and large Private Banks, supportive easing, and liquidity cycle, with favourable demand dynamics. In energy, downstream OMC offer underappreciated earnings momentum and strong cashflow. We retain our constructive view on premium residential real estate, where pricing and absorption remains firm. We tactically favour IT Services," it added.
"Our three key themes are Autos, Internet/new age businesses, and SMID lenders," Emkay said, adding Lenskart, Tata Motors CV, RBL, HDFC Bank, Craftsman Automation, Larsen and Toubro, Hexaware to its model portfolio and replacing TVS, Max Healthcare, Indigo, Kajaria Ceramics, Coforge, Radico Khaitan, Ultratech Cement Lenskart, Eternal, Tata Motors CV, IDFC First Bank & Shriram Pistons are its top picks.