India Inc has recorded its first aggregate earnings upgrade in five quarters, signaling a potential turnaround in the corporate profit cycle after an extended period of estimate reductions. This development represents a significant shift from the consistent downgrades witnessed across previous earnings seasons.

Earnings Revision Trends Show Clear Recovery

Corporate India has seen a 2% upgrade in FY26 profit estimates, primarily driven by mid and large-cap companies. This marks the first upgrade since the conclusion of the June 2024 results period, breaking a concerning pattern of consecutive estimate cuts.

The recovery has been primarily driven by mid-cap and large-cap companies, while small-cap stocks continue experiencing downward pressure.

Market Cap Segment Performance

The earnings upgrade cycle shows distinct patterns across different market capitalization segments. Mid-cap companies have emerged as clear leaders in the recovery phase, demonstrating resilience and improved business fundamentals.

The continued stress in small-cap earnings reflects ongoing challenges in the tail end of the market, where companies face greater operational and financial pressures.

Sector-wise Winners and Underperformers

The earnings revision landscape shows significant sectoral divergence, with certain industries experiencing substantial upgrades while others face continued downgrades. Oil & gas and telecom sectors lead the recovery with impressive profit upgrades.

Top Performing Sectors:

• Oil & Gas: +13% FY26 PAT revision
• Telecom: +30% FY26 PAT revision
• PSU Banks: +5% FY26 PAT revision
• Insurance: +3% FY26 PAT revision
• Non-lending NBFCs: +2% FY26 PAT revision

Underperforming Sectors:

• Utilities: -8% FY26 PAT revision
• Automobiles: -3% FY26 PAT revision
• Healthcare: -3% FY26 PAT revision

Notably, the automotive sector's decline is largely attributed to Tata Motors, as excluding this company would result in a 3% upward revision for the sector.

Growth Outlook and Economic Context

Motilal Oswal projects sustained earnings growth despite softer GDP expectations, forecasting FY26/FY27 earnings growth of 12%/15% for Nifty 50 and 15%/16% for their coverage universe. The brokerage argues that corporate profit growth can achieve mid-teens levels even with nominal GDP growth below 10%.

Historical analysis indicates that nominal GDP growth explains only approximately 20% of Nifty 50 profit growth, suggesting corporate earnings are influenced by multiple factors including leverage, pricing power, cost trends, and competitive dynamics rather than solely macro growth indicators.

Market Positioning and Investment Strategy

The brokerage maintains a constructive outlook on equities, expecting Indian markets to recover from calendar 2025 underperformance through healthier earnings, supportive domestic macroeconomic conditions, and improved geopolitical environment. Current Nifty 50 valuations appear reasonable at 21.3 times one-year forward price-earnings multiple compared to the long-term average of 20.8 times.

Preferred Investment Themes:

• Overweight: Diversified financials, automobiles, capital goods, IT services, telecom
• Underweight: Energy, metals, utilities, consumer staples

The analysis suggests that concerns about lower nominal GDP mechanically reducing corporate earnings may be overstated in the Indian market context, providing support for the positive earnings revision cycle.

Commerce Secretary Rajesh Agrawal has announced India's ambitious plan to achieve $2 trillion in exports by 2030, marking a significant milestone for the country's trade objectives and economic growth strategy.

Export Target Overview

The $2 trillion export target represents a substantial commitment to expanding India's global trade presence. This announcement reflects the government's strategic vision for enhancing the country's position in international markets over the coming years.

Strategic Implications

The ambitious export goal underscores India's confidence in its manufacturing capabilities and export potential across various sectors. This target aligns with the government's broader economic objectives and trade policy initiatives.

The announcement signals India's commitment to strengthening its role in global supply chains and expanding its market reach internationally. The target reflects expectations for sustained growth in the country's export-oriented industries and sectors.

Policy Framework

Achieving this export milestone will likely require coordinated efforts across multiple sectors and industries. The government's announcement indicates a strategic approach to trade promotion and export facilitation measures.

The $2 trillion target represents a significant step forward in India's trade policy objectives and economic development goals for the current decade.