Corporate India sees earnings revival on cooling inflation, tax cuts and monetary policy support
India’s retail inflation slumped to a record low of 0.25 per cent in October, driven by sharp fall in food prices and tax cuts on consumer goods, setting the stage for a rate cut in December.
| Photo Credit:
istock.com
India’s corporate earnings are staging their strongest recovery in over a year, with brokerages turning upbeat on profit growth for the second half as they expect a broader rebound in consumption.
Cooling inflation, massive tax cuts on consumer goods and monetary policy support are helping revive overall demand, while early festive-season data points to a pick-up in discretionary purchases.
Those trends, along with stable tax collections and firmer credit growth, have kept Indian markets grinding higher in recent weeks and given companies a clearer runway heading into the second half of the fiscal year.
“Overall, we anticipate accelerated double-digit growth in the second half of fiscal year 2026 and in fiscal year 2027,” said JP Morgan’s Rajiv Batra and Rushit Mehta.
India’s retail inflation slumped to a record low of 0.25 per cent in October, driven by sharp fall in food prices and tax cuts on consumer goods, setting the stage for a rate cut in December.
More companies see profit growth
Profit growth for BSE500 companies accelerated to 16.6 per cent in the September quarter, up from 10.7 per cent in June and a small contraction a year earlier, according to Emkay Global.
Oil marketing companies, telecom, metals, technology, non-bank lenders, cement and capital goods drove earnings, while autos, weighed down by Tata Motors, and large banks tempered aggregate performance.
Five heavyweights — Bharti Airtel, Tata Steel, HDFC Bank, Reliance Industries and TCS — accounted for most Nifty 50 profit growth, Motilal Oswal’s analysis of quarterly results showed.
For MSCI India constituents, revenue and profit rose 8% and 9% year-on-year, with nearly half beating estimates, signaling widening breadth, J.P. Morgan’s Rajiv Batra and Rushit Mehta said.
The Nifty 50 trades just 1 per cent below its record high, supported by GST cuts, improving earnings visibility and valuations holding near 21.2x forward P/E.
About 40 per cent of Nifty companies beat estimates and 28 per cent missed expectations in the second quarter, JM Financial said.
Boosted by improved earnings, the mid-caps hit a record on November 17, while small-caps lagged 7 per cent below their peak, amid higher earnings misses.
Jefferies said early festive demand pushed revenue growth of companies under its coverage to a 10-quarter high, while lending financials showed a clear rebound.
Published on November 18, 2025
