Based on her, actual earnings momentum is prone to take maintain within the second half of FY26, with Q2 anticipated to mark the underside. Till then, markets may even see restricted upside as they await recent triggers to emerge.
Edited excerpts from a chat:
Do you suppose the earnings season was higher for mid and smallcaps than largecaps? Is that the rationale behind the outperformance of the broader market?
Sneha Poddar: It’s tough to pinpoint precisely, however stock-specific efficiency has stood out in just a few pockets the place numbers have been higher than anticipated. Broadly talking, in comparison with the Nifty, the broader market has carried out comparatively higher. There might be a number of causes—total demand wasn’t as weak as feared, and firms made efforts to enhance profitability. Even uncooked materials costs remained comparatively steady.
Pricing strain wasn’t as seen both, which helped steel firms outperform. Total, demand held up, and earnings have been marginally higher than anticipated.
The inventory response is influenced by extra than simply earnings. Earlier, sentiment was detrimental each domestically and globally, however the backdrop has now turned extra constructive. After such a pointy correction, a pullback was anticipated.
There’s a view out there that we’re going via a section of time correction. The worth correction has occurred, however the time correction could last more. Would you agree?
Sneha Poddar: Sure, I consider it’s going to last more. A lot of the restoration that needed to occur has already taken place. From right here, there’s restricted upside, and the market is prone to consolidate till new triggers emerge—and people will take time. Whereas earnings have been higher, H1FY26 is predicted to stay alongside comparable strains. It’s largely from H2 that we anticipate the bottom impact to kick in, resulting in stronger restoration numbers.
Relating to the commerce warfare, it’s prone to proceed for not less than one other three months. No bilateral deal has been reached but. Issues will take time to settle, and that’s why the time correction section will proceed. The market is predicted to consolidate round present ranges.
So far as earnings are involved, do you suppose that from FY26, issues will enhance because of the base impact of a weak FY25?
Sneha Poddar: Sure, Q1 is predicted to be much like This autumn. Then in Q2, we may even see a backside, and from there, the restoration ought to start. Nevertheless, the principle development will possible be seen in H2.
In Q1, do you anticipate the wave of downgrades, particularly prevalent within the final three quarters however not a lot in This autumn—to return to a halt?
Sneha Poddar: Hopefully, sure. Should you have a look at international tendencies, the Chinese language financial system has proven some enchancment, and the federal government’s help via stimulus measures has helped stabilise the scenario. The tariff warfare seems to be on maintain for now. In any other case, firms would have needed to revise their logistics methods and search new markets, which may have disrupted their total value construction.
So from that perspective, nothing has drastically modified for firms. We consider the ratio of downgrades to upgrades will stay roughly steady.
