New Delhi— Companies listed on the Nifty 500 reported a strong performance in the third quarter of FY26, registering a 16 per cent year-on-year increase in profits — the highest growth recorded in the last eight quarters, according to a new report released on Friday.
The report by Bajaj Finserv Asset Management Limited highlighted that the latest earnings season reflects a broad-based improvement in corporate profitability, providing stronger support for India’s equity markets in the coming months.
Despite the solid earnings growth, domestic stock markets have remained largely range-bound for nearly 18 months, even as several global markets experienced a strong bull run. Analysts note, however, that improving economic fundamentals in India are gradually easing earlier headwinds.
Sorbh Gupta, Head of Equity at Bajaj Finserv AMC, said corporate earnings momentum has strengthened significantly over the past few quarters. According to him, the latest results indicate a widespread recovery in profitability across sectors, which could offer a stronger base for future market growth.
The report also pointed to improving domestic economic indicators. Credit growth has returned to double digits, signalling stronger demand and better liquidity in the financial system. Meanwhile, consumption indicators have started recovering following reductions in Goods and Services Tax rates.
Monetary policy support has also played a role. The Reserve Bank of India has implemented cumulative rate cuts of 125 basis points along with liquidity infusion measures, helping reduce borrowing costs for both businesses and consumers.
However, new uncertainties in 2026 have contributed to market volatility. The rapid global expansion of Artificial intelligence has raised concerns about possible short-term effects on demand for Indian IT services and job creation, leading to recent underperformance in the sector.
Gupta noted that technological shifts often create temporary disruptions but added that Indian IT companies have historically shown resilience and the ability to adapt to such transitions.
Geopolitical tensions in the Middle East have also added risks, particularly regarding crude oil supplies. India imports about 85 per cent of its crude oil needs, with nearly half of these shipments passing through the strategic Strait of Hormuz, making supply routes vulnerable during regional conflicts.
Analysts warn that prolonged instability could drive up inflation, weaken the rupee and negatively affect sectors such as aviation, paints, chemicals and oil marketing companies. It could also lead to outflows from foreign portfolio investors.
Meanwhile, fixed income markets have also witnessed volatility following the Union Budget and the latest monetary policy meeting. Foreign investor outflows and geopolitical tensions pushed the rupee to a record low while raising bond yields.
Siddharth Chaudhary, Head of Fixed Income at Bajaj Finserv AMC, said the revamped Consumer Price Index series with a 2024 base year indicates stable core inflation, strengthening the case for a steady policy environment.
However, rising tensions between the United States and Iran later pushed crude oil prices higher again, putting pressure on the rupee and steepening the bond yield curve, especially at the ultra-long end.
With inputs from IANS