Q2 FY26 Earnings: Metals and Energy Lead as Consumer Sectors Lag

The September quarter earnings season has been a mixed bag for India Inc., reflecting resilience in select sectors despite subdued performance in others. While broad consumption categories continued to struggle, sectors such as metals, mining, and oil marketing companies (OMCs) delivered stronger-than-expected results, helping overall corporate earnings outperform initial estimates.

Moderate Growth, but Above Estimates

An analysis of the results announced so far by Nifty 50 constituents shows a modest yet positive trend. Revenue and operating profit have grown at a single-digit pace, but the aggregate earnings performance has edged past forecasts. The improvement was largely driven by cyclical sectors—especially metals and energy—while core consumption demand remained muted.

Among major indices, financials and energy contributed meaningfully to profit growth. Earnings upgrades for large banks and diversified conglomerates have supported an incremental rise in Nifty earnings expectations for FY26, signaling a cautiously optimistic corporate outlook for the coming quarters.

Sectoral Breakdown: Stability in Banks and IT

Banks and information technology companies reported largely stable operating performances. Credit growth for lenders remained moderate, aided by stable margins and improving asset quality. The trend of contained credit costs and early signs of stabilization in unsecured retail portfolios point to an improving balance-sheet environment for large financial institutions.

IT companies, on the other hand, showed steady revenue momentum. Margins held firm, though most firms remained conservative in their forward commentary due to macroeconomic uncertainty and continued spending caution by global clients.

Consumer and Mass Segments Struggle Amid GST Impact

In contrast, the consumer goods space faced headwinds. Weak volumes across mass-consumption products reflected the ongoing effects of GST-related inventory adjustments and rural softness. That said, companies catering to discretionary urban demand managed a mild sequential recovery, supported by festival-linked restocking and improved sentiment in metropolitan markets.

Analysts expect the December quarter to mark a turning point for consumer-oriented businesses. The combination of festive spending, rural recovery on the back of a strong monsoon, and lower fuel prices could lift volumes in the coming months.

Broader Market Picture: Earnings Recovery Underway

Market-wide, the second-quarter earnings trajectory has been stable with minimal negative surprises. Aggregate profit growth for large-cap corporates has aligned closely with projections, suggesting that the earnings downgrade cycle may be bottoming out. Upgrades in select large-cap names in banking, metals, and capital goods have pushed index-level earnings slightly higher for FY26 and FY27 estimates.

Despite a tepid performance in equities over the past year, analysts view the domestic market as structurally stronger than in previous cycles. Improved macro fundamentals, easing inflation, and consistent government spending are seen as supportive factors for sustained earnings recovery.

Outlook: Earnings Key to Market Momentum

While external risks such as global trade tensions and foreign capital flows continue to weigh on sentiment, the strength of corporate earnings remains the decisive factor for the Indian market’s trajectory. A favorable macroeconomic backdrop—combined with expectations of stronger Q3 earnings—could set the stage for renewed optimism.

The coming quarter is expected to benefit from festive demand, improved agricultural output, and seasonal consumption triggers such as the wedding season. If these factors translate into robust top-line growth, the market could regain upward momentum and test new highs in the months ahead

Market this week

Source: BSE and NSE

• Indian equity markets ended lower for the second straight week, as investor sentiment remained cautious amid mixed corporate earnings and ongoing concerns over trade tariff discussions with the US.
• The benchmark indices witnessed mild declines throughout the week, extending their recent downward trend, while broader markets also showed weakness after a volatile start to the month.
• On the sectoral front, selling pressure was visible across most indices — Nifty Media fell around 3.2%, Nifty Defence declined 2%, Nifty Metal dropped 1.7%, and Nifty IT shed 1.6%.
• The Nifty PSU Bank index stood out as a key gainer, rising 2% during the week, supported by stable earnings performance and strong credit growth momentum.
• Foreign Institutional Investors (FIIs) continued to offload equities, registering net sales of ₹1,632.66 crore, reflecting cautious global sentiment and profit-taking in select sectors.
• In contrast, Domestic Institutional Investors (DIIs) remained active buyers, providing market support with net purchases of ₹16,677.94 crore over the week.
• Market momentum was influenced by a mix of global trade uncertainty, foreign fund outflows, and select sectoral weakness, keeping overall sentiment subdued.
• Going forward, investors are expected to closely track earnings announcements, foreign investment trends, and developments on tariff negotiations for near-term direction in the equity markets..

Weekly Leaderboard

Source: BSE

Stocks that made the news this week:

Piramal Finance Listing:

Piramal Finance made its market debut on November 7 at ₹1,260 per share on the NSE, following its demerger from Piramal Enterprises. The stock opened 12% above its discovered price of ₹1,124.20 and quickly surged 5% to hit the upper circuit at ₹1,323. With this strong listing, Piramal Finance now commands a market capitalization of nearly ₹30,000 crore. Trading in Piramal Enterprises shares had been suspended since late September ahead of the restructuring.

Redington Q2 Performance:

Shares of Redington rallied nearly 15% to ₹287.15 on November 6 after the company posted robust Q2 FY26 results. The Apple products distributor reported a 32% year-on-year jump in net profit to ₹388 crore, driven by strong demand and a 17% increase in revenue to ₹29,076 crore. The upbeat performance boosted investor confidence, making Redington one of the top gainers of the day, even as Indian Hotels Company (IHCL) shares slipped over 6% to ₹697.

Blue Star and Godrej Properties Decline:

Blue Star shares fell over 6% after the company flagged a demand slowdown in the air conditioner segment due to extended rains and cooler temperatures, which dampened channel sales. The firm’s Q2 FY26 net profit rose just 3% year-on-year to ₹99 crore. Godrej Properties also came under pressure, with its stock declining nearly 5% to ₹2,186.6 amid concerns over a revenue dip despite stronger profit and booking growth.