Indian Stock Market: Q4FY26 Earnings Season Expectation; Navigating Domestic Resilience amid Global Headwinds

For any stock market, earnings & valuation are the key ─ everything else is noise and an excuse for the underlying volatility, which may be treated as an opportunity for both investors & traders. With a two-week pause (temporary ceasefire) in place after more than a month of intense geopolitical tension surrounding the Iran war, the market has started to find some relief

Now the focus of the market is not only on a permanent Iran war ceasefire (peace agreement) but also on the Q4FY26 earnings season, which is set to commence formally with the release of IT bellwether TCS on April 9, 2026. The overall market expectations for Q4FY26 and also FY26 are modest & mixed amid structural domestic tailwinds and cyclical global/US headwinds (like the US trade/tariff war to Iran war) ─ US policies have both global & local implications ─ primarily through higher tariffs, higher energy costs, a higher USD and higher inflation/input costs.

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Although a higher USDINR may be positive for exporters' earnings, overall, it’s negative for Main Street and also Dalal Street, as India is an import-heavy economy. The lethal combination of higher USDINR and higher energy/commodity prices is bound to cause higher imported inflation & higher input costs, which may result in a muted bottom line for Indian corporates. A higher cost of living may affect discretionary consumer spending, and subsequent lower demand may also affect private CAPEX and eventually the labour market this may be a vicious cycle.

Overall market expectations for Q4FY26

For Q4FY26, there is an expectation of modest earnings per share (EPS) growth for the Nifty 50 around 6-8% for Q4FY26 on the back of likely growth in the top line (revenue) around 10-12% (YoY). The FY26 NIFTY EPS may grow around 11-13% from FY25. The focus is now gradually also shifting to FY27 ─ analysts are now expecting 8.5% growth in Nifty EPS vs 14% projected before the Iran war. If the Iran war erupts again after a 2-4 week pause and lingers, it may cause stagflation for the Indian economy (higher inflation, higher unemployment and lower GDP growth).

Sector-Wise Outlook: IT, BFSI, Auto, Metals, Upstream Energy/Oil & Gas, Fertilisers, Capital Goods, Industrials, and Defence, FMCG, Paints and OMCs

The expected earnings landscape of Dalal Street reveals clear sectoral polarisation amid structural domestic tailwinds and cyclical global headwinds.

Strong Performers Expected from

• Automobiles: The auto sector stands out with blockbuster potential amid
  • India’s auto retail sales may grow robustly in FY26 amid GST recalibrations (lower rates), rural demand recovery and robust festival demand ─ helping both rural & urban sales.
  • Automobile companies like Maruti, Tata Motors, and M&M are poised for robust volume-led performances, benefiting from a “Rural Renaissance” and policy-driven affordability.
• Financials: Banks, NBFCs and Insurance companies (BFSI): Likely tailwinds may come from
  • Healthy credit growth (13-14% YoY) led by Gold and automobile finance (secured loans)
  • Robust NIM (Net Interest Margin) despite the gradual transmission of RBI rate cuts and elevated funding costs 
  • Stable asset quality
• Capital Goods, Industrials, and Defence: Potential tailwinds may be
  • Huge government order books & revenue visibility
  • Healthy growth from resilient spending for infrastructure by the government
  • Self-reliance theme and growing geopolitical tensions (like Iran & Ukraine war)
• Upstream Energy/Oil & Gas: These sectors may benefit from
  • Higher global commodity prices  amid lingering geopolitical tensions & trade fragmentations
  • Oil & gas producers like ONGC and coal producers like Coal India may report robust performances
• Metals: This sector may gain from 
  • Higher global prices are partly due to robust AI spending (like the data centre construction boom, which requires metals; AI chips need Silver, etc.).
  • Resilient infra-CAPEX in India
• Fertilisers:  
  • A prime benefit of the Iran war is  Hormuz bottlenecks, supply disruptions and higher domestic prices, especially in late Q4FY26

Muted performance is expected from

• Information Technology (IT) Services: A muted quarter is widely anticipated for this export-savvy sector despite higher USDINR. This may be due to various global headwinds, such as:
  • Subdued client spending amid US policy uncertainty and lingering geopolitical tensions & fragmentations
  • AI disruptions ─ cheaper & more productive generative AI may replace traditional IT service jobs
  • But new AI opportunities may also help Indian IT service companies ─ big names like TCS, INFY, etc.
• OMCs (Oil Marketing Companies) and downstream energy: Although this sector may report robust numbers for full FY26, part of Q4 (March) may be affected heavily due to
  • Elevated global crude oil prices and inability to pass the higher prices to end consumers, affecting GRM (gross refining margin) and also overall OPM (Operating Profit Margin)

Although internal government ED (Excise duty) adjustments may help to some extent, elevated oil & gas prices, if they linger further, may cause subdued earnings growth in FY27, especially if the government does not allow for a retail price hike. The government also imposed export duties for refined products to ensure a sufficient global supply if this policy lingers, it may cause more headwinds for the oil refiners in H1FY27.

• FMCG and Paints: Oil & gas and Fertiliser downstream companies may be affected as
  • Higher crude oil prices may cause higher input price pressure and lower OPM
  • Higher Fertiliser prices may affect rural & agri-market-savvy tractors, two-wheelers, seeds/pesticides (chemicals) and MFIs (direct/indirect effects due to higher Fertiliser prices)
  • Scarce & costly LPG downstream users like quick-service restaurants (QSRs) may have faced closure & margin pressure in late Q4FY26, especially in March, after the Iran war broke out and caused disruption in the Strait of Hormuz chokepoint (energy & commodity)
  • The lingering LPG crisis may affect India’s food & hospitality industry, including SWIGY/ZOMATO, and the urban gig economy to some extent.

Conclusions

The Q4FY26 and overall FY26 earnings expectations are mixed among market participants due to structural policy and consumption tailwinds locally and cyclical vulnerabilities globally. Domestic savvy sectors like automobiles, financials, capital goods, metals, fertilisers, and pharmaceuticals (defensive, all-weather) may see some traction. But export-heavy and energy-savvy sectors may suffer some setbacks due to cyclical global headwinds. But overall, India’s long-term structural growth story is intact. Thus, the market is expecting double-digit (~10%) growth for Nifty EPS for the next few years on average, in line with India’s estimated nominal GDP growth.