Citigroup has released its earnings forecast for the third quarter, projecting robust growth for major Indian companies as the reporting season begins. The global investment bank expects companies in the Nifty index to deliver strong operational performance driven by improving market conditions.

Earnings Growth Projection

The financial services firm has forecasted third quarter EBITDA growth of 11% year-on-year across Nifty companies. This projection reflects expectations of improved corporate performance compared to the same period in the previous year.

Growth Drivers

Citi's optimistic outlook is anchored on two key factors that are expected to support corporate earnings:

• Consumption Recovery: Improved consumer spending patterns are anticipated to boost revenue growth across sectors
• Credit Growth: Expansion in lending activities is expected to support financial sector performance and broader economic activity

The combination of these factors suggests a favorable operating environment for Indian corporations during the quarter.

Market Context

The forecast comes at the beginning of the earnings season, providing investors and market participants with benchmark expectations for corporate performance. The 11% EBITDA growth projection indicates Citi's confidence in the resilience and growth potential of India's largest listed companies during the reporting period.

Indian benchmark equity indices staged a recovery on Friday afternoon, paring significant losses from earlier in the session. The Sensex climbed approximately 200 points from its intraday low to trade at 83,605.62, while the broader Nifty hovered above the psychologically important 25,700 level around 3:15 p.m.

The recovery came after a sharp morning sell-off that saw both indices decline significantly. The Sensex had slipped 767.82 points or 0.91% to 83,413.14, while the Nifty fell 246.95 points or 0.95% to 25,629.90 during the session's low.

Market Performance Overview

The indices have experienced sustained selling pressure over recent sessions, with both benchmarks declining over the past four trading days.

Key Drivers Behind Market Recovery

US Supreme Court Tariff Ruling Optimism

Market sentiment received support from expectations surrounding a crucial US Supreme Court ruling on President Trump's use of emergency powers to impose tariffs. The case centers on whether the President can invoke the International Emergency Economic Powers Act (IEEPA) to levy tariffs without congressional approval. During November arguments, justices indicated skepticism over such authority.

Ajit Mishra, Senior Vice-President (Research) at Religare Broking, noted that export-oriented stocks experienced a rebound driven by hopes of potential tariff relief. However, he cautioned that "market participants should temper their expectations, as the US government has planned other legislative measures to maintain or even raise tariffs in the event of an adverse ruling."

Easing Geopolitical Tensions

Geopolitical concerns showed marginal improvement after President Trump cancelled a second wave of attacks on Venezuela, citing a "sign of seeking peace." Trump also indicated that major oil companies would invest in the country, contributing to reduced market anxiety.

Value Buying Activity

Traders engaged in value buying following the four consecutive sessions of decline. The sustained selling pressure created opportunities for investors to purchase stocks at relatively lower levels, contributing to the afternoon recovery.

Technical Analysis Outlook

Devarsh Vakil, Head of Prime Research at HDFC Securities, highlighted that the Nifty has breached several key technical support levels. The index violated its 50-day exponential moving average at 25,911 and broke below the previous swing low of 25,878 on the daily chart.

Vakil noted that the next meaningful support level appears near 25,700, which coincides with the December 2025 swing low. On the upside, the 26,000-26,050 zone is expected to act as strong resistance in the near term.

Market Outlook

The afternoon recovery demonstrates the market's resilience despite sustained selling pressure over recent sessions. The combination of potential tariff relief, reduced geopolitical tensions, and value buying activity provided the necessary support for indices to recover from their intraday lows. However, technical indicators suggest caution, with key support and resistance levels clearly defined for near-term trading ranges.