Nifty Q1 Earnings Muted, No Green Shoots Eyed In Near-Term: D-Street Expert's Warning Shatters Q2 Optimism
Sanjeev Prasad, MD, Co-Head, Kotak Institutional Equities told NDTV Profit that the Indian economy and corporate earnings will gather pace only when there is enough job creation for the masses.
The listed corporates of India’s benchmark index – Nifty 50 – have largely reported an in-line set of numbers for the June-ended quarter. However, several D-Street experts have said that the Nifty 50 earnings growth in the June quarter remained largely muted over low consumption in urban areas.
Kotak Institutional Securities has said that the earnings season is showing continued weakness in consumption, muted IT services demand, and weak loan growth for banks. Sanjeev Prasad, MD, Co-Head, Kotak Institutional Equities told NDTV Profit in an exclusive interview that Nifty 50's earnings growth for Q1 is expected to touch mid-single digits. Prasad also does not expect any green shoots going into the second quarter of the fiscal.
Kotak's Sanjeev Prasad remains cautious on Q2 recovery
Kotak's Sanjeev Prasad told NDTV Profit that the expectations of Nifty 50's earnings growth were muted going into Q1 and the results were mostly in-line with estimates. "Most companies reported muted earnings or below estimates in Q1. The biggest beat was from State Bank of India," noted Prasad.
However, the market expert does not expect any major recovery in the upcoming second quarter (July-September) of FY26. "Don't expect green shoots of growth going into Q2. The economy is not creating enough good-quality jobs for the manufacturing segment," he warned.
According to Prasad, job creation for the mass segment is needed to move the economy. He also highlighted that private capex is also not enough for decent earnings recovery yet. "Private investment is not showing signs of growth despite income tax cuts. The optimism is largely confined to the high income households," he said.
Kotak Securities on Q1 earnings
Kotak Securities continues to stay bearish on the IT sector as companies continue to face challenges around growth and margins, given the persistent weak discretionary spending environment. IT companies cited uncertainties from macro headwinds, delayed decision-making by clients, and soft discretionary spending.
Analysts see pressure on consumer durables and auto companies because of which the FY26 Nifty earnings quality remains weak. It highlighted that the lower food prices may be positive for urban growth but not for rural economy. The brokerage sees a muted outlook across sectors, which should result in further cuts in consensus earnings estimates.
