Nifty, Sensex Q3 results: Strategy as earnings season kicks off next week

Nifty and Sensex constituents, on an aggregate basis, are likely to see single-digit growth in net profit for the December quarter as analysts believe recovery still stays elusive.

Nuvama India said Nifty 50 earnings are likely be flat YoY in the December quarter, lower than 5 per cent growth posted in H1FY26. This poses downgrade risks for FY26 numbers itself, it said.

"For FY27, consensus is building in 15 per cent EPS growth, which we think could disappoint. Our thesis is premised on weak global growth along with risks to margins owing to increased competitive intensity/capex commissioning to offset tailwinds of domestic easing and a weaker rupee," the brokerage added.

Kotak Institutional Equities expects Q3 net profit of the 30-stock Sensex to increase 6.1 per cent YoY. This brokearge sees Nifty profit to increase 1.7 per cent YoY. "We estimate Nifty-50 EPS at Rs1,072 for FY26 and Rs 1,267 for FY27," it said.

Bharti Airtel, HDFC Bank, Tata Steel, JSW Steel, and Larsen & Toubro are among largecaps expected to drive to Nifty earnings in the December quarter. Coal India, ONGC, Axis Bank, Interglobe Aviation, and Cipla are projected to drag the same, MOFSL said in its earnings preview notes.

MOFSL said 19 Nifty companies are likely to report a profit after tax growth of above 15 per cent YoY. A total of 12 Nifty companies are expected to report either a loss or a YoY dip in profit, it said.

"Earnings revision trajectory has distinctly improved, and we see limited risks of meaningful earnings cuts barring any major six-sigma event, which is more likely to emerge exogenously," MOFSL said as it sees Nifty earnings growing 8 per cent YoY in Q3.

Excluding financials, MOFSL sees earnings jumping 9 per cent YoY. Barring global commodities, Nifty earnings are seen growing 11 per cent YoY. Sales and Ebitda for Nifty companies are expected to grow 11 per cent YoY and 10 per cent YoY, respectively. For the quarter, Ebitda margin for Nifty constituents is likely to contract 50 basis points to 22.1 per cent (ex-financials) during the quarter, MOFSL said.

Strategy

Beyond Q3 numbers, investors are likely to be looking at the corporate commentary on the continuing effect of stimulative measures. This, MOFSL said, will help assuage investor concerns over the sustainability of the demand uptick once initial enthusiasm post rate cuts and tax cuts normalises.

Nuvama said earnings downgrades along with high valuations warrant a defensive bias. Its key overweight sectors are telecom, internet, IT, pharma, consumer, cement and chemicals. The brokerage is underweight on BFSI, industrials, autos and power stocks.

Antique Stock Broking said sectors, which may see earnings upgrade, include auto, metals, real estate and textile; while downgrade risk may materialise in building material, oil & gas, banks, railways, EMS and defence, it said.

"Our preferred themes for 2026 are a) private capex revival; b) financials (especially banks, insurance, and AMCs); c) select discretionary names (like alcohol beverage, jewelry retail, hotels); and d) select mid and small caps. Sectors that we are underweight on are FMCG, pharma, and oil & gas," Antique said.

This brokerage is 'neutral' on IT services, auto, metals, power utilities, cement, and telecom.

It projected Nifty EPS CAGR of 16 over over FY26–28 and suggested a March 2027 Nifty 50 target of 29,500.