The equity market is currently navigating a period of long consolidation, with the Nifty 50 hovering in a narrow 5–6 per cent band for approximately nine months. Recent 3QFY26 earnings reviews present a nuanced landscape where multi-quarter high sales growth contrasts with softening profitability across various segments.
CLSA characterises the current environment as a “narrow market”. While NSE500 sales growth hit a 10-quarter high of 12.9 per cent y-o-y, PAT growth softened to 9 per cent — the lowest in five quarters — partly due to provisions linked to new labour code changes. Nearly 80 per cent of the incremental profit growth came from oil & gas and financials, and growth excluding these two sectors was only 0.6 per cent y-o-y.
CLSA warns of “high EPS downgrade risks in small caps” and continues to favour large caps.
In contrast, PL Capital suggested that “all decks are cleared for growth”. They highlight visible “green shoots” from new trade deals with the US and EU, and a demand revival buoyed by lower inflation and GST rationalisation. PL Capital remains overweight on banks, consumer, auto, and capital goods, setting a 12-month Nifty target of 27,958.
Nomura shares an optimistic outlook, Q3 earnings trend of 255 companies (BSE 200 + its coverage universe), projecting steady earnings momentum with low risk to near-term estimates. They maintain a December 2026 Nifty target of 29,300. While the IT services sector faced recent drawdowns, Nomura argues that market concerns regarding AI-driven deflationary pressures are “premature and overdone”. They expect IT companies to gain from new business opportunities. The brokerage is positive on financials, cement, consumer discretionary, auto ancillaries, telecom and pharmaceuticals.
Goldman Sachs notes a global structural shift favouring “capital intensive” sectors (the “HALO effect”), driven by fiscal expansion and a manufacturing rebound. The Capital Intensive basket includes the expected names from utilities, energy, basic resources and industrials, but also a much broader set of firms across aerospace and defence, transport, long‑cycle industrials, luxury and selective consumer subsectors, the report read.
While mid-caps have led profit growth for six straight quarters, consensus is increasingly shifting toward large caps as the most de-risked segment amidst persistent small-cap earnings cuts
Published on February 25, 2026