Excluding financials, earnings for the MOFSL universe and the Nifty 50 are expected to grow 19% and 9% YoY, respectively. Further, barring metals and oil & gas (O&G), earnings are projected to rise 14% YoY for the MOFSL universe and 11% YoY for the Nifty 50, highlighting broad-based growth across several sectors.
The overall earnings momentum in Q3FY26 is expected to be driven by oil & gas, where profits are estimated to jump 25% YoY, and financials, led by NBFC lending companies with a 26% growth.
Automobiles are projected to deliver a 25% YoY increase in earnings, while metals are seen growing 15%. Telecom profits are expected to jump 2.6 times over a low base in Q3FY25, while technology sector earnings are likely to rise 8%.
Other key contributors include real estate, where earnings are projected to surge 64% YoY, capital goods at 24%, cement at 66%, and NBFC non-lending firms at 31%. Together, these sectors are expected to account for nearly 77% of the incremental YoY earnings accretion during the quarter.
In contrast, earnings contribution from banks is expected to remain modest, with private banks seen growing profits by 4% YoY and public sector banks by 3%. Infrastructure and media sectors are likely to drag overall earnings, with profits estimated to decline 3% and 7% YoY, respectively.
FY26 outlook
Looking ahead, MOFSL expects FY26 earnings for Nifty companies to grow 8% YoY, and excluding financials, FY26 earnings are expected to rise 7% YoY. Further, barring metals and O&G, FY26 earnings growth is estimated at 8% YoY for the Nifty 50.
As for the broader MOFSL universe, profit is projected to record a 14% YoY increase in the full financial year. Excluding financials, FY26 earnings are expected to rise 17% YoY, the note said. Excluding metals and O&G, a 12% YoY growth is expected for the broader universe.
However, MOFSL has trimmed its FY26 and FY27 Nifty EPS estimates by 2.2% and 1.1%, respectively, and now expects it to grow 9% YoY in FY26 to Rs 1,084, followed by a 15% growth in FY27 to Rs 1,267.
The downward revision has largely been driven by weaker expectations from the metals, oil & gas, financials and consumer sectors, the note said.
MOFSL’s top 5 Nifty 50 ideas
The brokerage’s top Nifty ideas include PSU lender State Bank of India (SBI), Titan Company, Mahindra & Mahindra (M&M), Infosys and Eternal.
Top 5 non-Nifty ideas
Dixon Technologies, Indian Hotels, Billionbrains Garage Ventures (Groww), TVS Motors and Radico Khaitan.
Sectoral ratings
MOFSL remains ‘Overweight’ on autos, diversified financials, industrials and EMS, consumer discretionary and technology. It remains ‘Underweight’ on oil & gas, metals and consumer staples.
2026 market outlook
The brokerage noted multiple levers to propel Indian equity markets in 2026. “In CY25, India had to endure a constant flow of disproportionate and punitive US trade measures, which were instrumental in catalysing a USD 19 billion in FII outflows. However, the government and the RBI have been active in mitigating external headwinds and have adopted several stimulative fiscal, monetary and reform measures to unshackle domestic growth impulses,” the note said.
In its opinion, these measures should now start to manifest in full force in 2026, and MOFSL sees limited domestic risk factors thwarting this.
Despite these challenges, the Nifty eked out early double-digit gains in CY25, rising 11%, with the broader Nifty 500 growing 7%, though it underperformed global indices materially. The MSCI EM index jumped 31% while MSCI AXJ rallied 30% in the same period.
However, geopolitics and global trade continue to be a strong caveat and could cast a shadow of chronic risk aversion for equity markets, the note warned.
Also Read | Quant Small Cap Fund adds Adani Green Energy and 3 other stocks, exits LIC in December
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)