Motilal Oswal Projects 8% Nifty Q3 Earnings Growth, Highest in Eight Quarters
Motilal Oswal Financial Services forecasts robust 8% year-on-year earnings growth for Nifty in Q3FY26, representing the strongest performance in eight quarters. The projection is driven by exceptional sectoral performance including real estate at 64% growth, automobiles and oil & gas at 25% each, with the brokerage's coverage universe expected to deliver 25% YoY growth, significantly outpacing broader market expectations.
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Motilal Oswal Financial Services expects the October-December quarter earnings to register their highest growth in eight quarters, with the Nifty likely delivering an 8.00% year-on-year growth. The improved earnings environment is expected to drive broad-based growth across multiple sectors, with companies under MOFSL's coverage universe projected to report a robust 25.00% year-on-year growth.
Q3FY26 Earnings Projections
The latest earnings outlook shows significant improvement across key metrics, with excluding financials showing even stronger performance indicators.
| Metric | Nifty 50 Growth (YoY) | MOFSL Universe Growth (YoY) |
|---|---|---|
| Overall Earnings | 8.00% | 25.00% |
| Excluding Financials | 9.00% | 19.00% |
| Excluding Metals & O&G | 11.00% | 14.00% |
Sectoral Performance Drivers
Leading Growth Sectors
The overall earnings momentum in Q3FY26 is expected to be driven by several key sectors showing exceptional growth potential.
| Sector | Projected Growth (YoY) | Key Highlights |
|---|---|---|
| Oil & Gas | 25.00% | Primary earnings driver |
| Automobiles | 25.00% | Strong performance expected |
| NBFC Lending | 26.00% | Leading financials growth |
| Real Estate | 64.00% | Highest sectoral growth |
| Cement | 66.00% | Strong infrastructure demand |
| Telecom | 2.6x growth | Recovery from low base |
| Technology | 8.00% | Steady growth trajectory |
| Capital Goods | 24.00% | Infrastructure boost |
| NBFC Non-lending | 31.00% | Diversified financial services |
These sectors are expected to account for nearly 77.00% of the incremental year-on-year earnings accretion during the quarter.
Banking Sector Outlook
In contrast to other financial services, traditional banking is expected to show modest growth with private banks projected to grow profits by 4.00% year-on-year and public sector banks by 3.00%. Infrastructure and media sectors are likely to drag overall earnings, with profits estimated to decline 3.00% and 7.00% year-on-year, respectively.
FY26 Full Year Outlook
Looking ahead, MOFSL expects FY26 earnings for Nifty companies to grow 8.00% year-on-year. The broader MOFSL universe profit is projected to record a 14.00% year-on-year increase in the full financial year.
| Timeframe | Nifty EPS | Growth Rate |
|---|---|---|
| FY26 | ₹1,084 | 9.00% YoY |
| FY27 | ₹1,267 | 15.00% YoY |
However, MOFSL has trimmed its FY26 and FY27 Nifty EPS estimates by 2.20% and 1.10%, respectively. The downward revision has largely been driven by weaker expectations from the metals, oil & gas, financials and consumer sectors.
Investment Recommendations
Top Nifty 50 Ideas
MOFSL's preferred Nifty 50 stocks include State Bank of India, Titan Company, Mahindra & Mahindra, Infosys, and Eternal, representing a diversified approach across sectors.
Sectoral Ratings
The brokerage maintains 'Overweight' ratings on automobiles, diversified financials, industrials and EMS, consumer discretionary and technology sectors. It remains 'Underweight' on oil & gas, metals and consumer staples.
2026 Market Outlook
MOFSL noted multiple levers to propel Indian equity markets in 2026, highlighting that government and RBI stimulative fiscal, monetary and reform measures should start to manifest in full force. Despite challenges, the Nifty achieved 11.00% gains in 2025, though it underperformed global indices with MSCI EM index jumping 31.00% and MSCI AXJ rallying 30.00% in the same period.
The brokerage expects these policy measures to drive sustained earnings recovery, marking a significant improvement in corporate performance across sectors as India navigates through global trade uncertainties and domestic growth opportunities.
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