Will Markets Hit New Highs Soon? All Eyes on Q1 FY26 Results

The Indian equity market has been resilient in the face of multiple global and domestic headwinds, but is it gearing up for new highs? Or will it consolidate and wait for fresh triggers? If we go by the recently concluded FY25 earnings season, the answer seems to lean towards patience — with the market likely waiting for Q1 FY26 results to confirm whether growth momentum is making a convincing comeback.

📌 What the FY25 Earnings Say

A deep dive into the earnings of Nifty 50 heavyweights, which collectively account for over 68% of the index, reveals a mixed picture:

YoY Profit Growth Trend:

  • Q1 FY25: 7%
  • Q2 FY25: 11%
  • Q3 FY25: 11%
  • Q4 FY25: 8%

While profit growth did improve in the middle of the year, it lacked consistency, with Q4 showing a slight slowdown. Companies like HDFC, SBI, Sun Pharma, and Bajaj Finance showed commendable growth, but heavyweights like Bharti Airtel, Reliance, and ITC displayed patchy performances, weighing on overall sentiment.

YoY Sales Growth Trend:

  • Q1 FY25: 16%
  • Q2 FY25: 9%
  • Q3 FY25: 11%
  • Q4 FY25: 11%

Sales growth too started strong in Q1 but moderated as the year progressed. Financials and consumer lenders continued to support topline growth, while sectors like telecom, FMCG, and IT offered uneven contributions.

 

📌 What Does This Mean for the Market?

The markets thrive on earnings growth — not just growth in isolation but a clear, broad-based, and accelerating trend. While FY25 numbers were respectable, they didn’t deliver a strong enough earnings surprise to propel the Nifty 50 to decisive new highs.

This is particularly crucial as valuations remain elevated, and without visible earnings upgrades, it becomes harder to justify significant rallies.

 

📌 Why Q1 FY26 Will Be Critical

Going ahead, Q1 FY26 numbers could act as the next big trigger. The market will be keenly watching whether:

  • The current moderation in profit and sales growth reverses.
  • High-growth names like HDFC, SBI, and Bajaj Finance can sustain momentum.
  • Laggards from FY25 can turn around.
  • Sectoral leaders consolidate their positions.

A strong earnings performance in Q1 FY26 could reignite confidence and set the stage for a fresh rally. Conversely, another mixed quarter may prompt the market to extend its consolidation phase further.

 

📌 Conclusion

Until there’s clear evidence of sustained earnings momentum, especially from index heavyweights, the market is unlikely to rush towards new highs. Expect rangebound movements, increased stock-specific action, and heightened sensitivity to global cues and domestic macros.

The bulls might have to wait a little longer — but as always, patience in markets tends to pay.

 


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