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Informist, Friday, Jul. 10, 2026

MUMBAI – Sectoral performance in the June quarter is likely to be soft due to higher Brent crude prices and supply shortages across multiple sectors, but underlying trend remains strong, according to Emkay Global Financial Services. The brokerage underscored that demand remained strong during the June quarter and expected revenues across staples and discretionary sectors to grow 10% and 51% on year, respectively. Demand is also expected to be resilient in the near term with the September quarter likely to benefit from some margin benefits. The brokerage maintains its positive outlook on Indian equities following the correction in the benchmark Nifty 50 index and prefers stocks in the discretionary and industrials sectors but maintains an "underweight" view on banking, financial services, and insurance.

For the June quarter, the bottom line of the benchmark Nifty 50 companies is seen growing at 8.6% on year and 5.2% on quarter, with telecommunications, discretionary, and metals sectors driving the gains among the companies within the brokerage's coverage. Excluding BFSI, the top-line growth for Nifty 50 companies in the quarter is seen declining to 9.5% from 13.6% reported in the previous quarter, despite the pickup in inflation. However, earnings before interest, taxes, depreciation, and amortisation margins are expected to improve by 230 basis points to 20.3% for the reporting quarter, according to the brokerage.

The June quarter forecast of 10% weighted earnings per share growth for the benchmark Nifty 50 is behind the forecast for financial year 2026-27 (Apr-Mar). The brokerage attributes this lag to energy disruptions but expects this to recede in the latter part of FY27. The brokerage maintains its 15% earnings per share growth forecast for financial year 2026-27 (Apr-Mar) on the back of strong demand and some margin tailwinds seen kicking in from the September quarter onwards. 

The brokerage expects a macroeconomic revival to support a recovery in earnings. Consumption demand is expected to be strong on the back of multiple stimuli through 2025, such as rationalisation of the goods and services tax, cumulative repo rate cut of 125 bps by the Reserve Bank of India, and income tax cuts in February 2025. Further, the government's capital expenditure and GDP remain resilient, although the state and corporate capital expenditure is sluggish, the brokerage said. 

Broader earnings forecasts also show signs of a revival, with the share of companies with over 25% earnings per share growth expected to rise from 31% in FY26 to 43% in FY27 based on the consensus universe of over 500 companies covered by more than five analysts. Discretionary, industrials, and materials are leading the earnings recovery. Losses in oil marketing companies are expected to pull down headline numbers of energy companies. 

With the bottom-line growth forecasts of over 35% for the June quarter, the telecommunication, discretionary, excluding auto, and metal sectors lead the gains among companies covered by the brokerage. Materials, excluding metals, pharmaceuticals, and industrials are expected to contract, according to the brokerage. Net profit growth for staples is expected to be weak at 1.6% despite strong volume growth, with margin declines for ITC, Emami, and Colgate being the key drag, the brokerage said.  End

Reported by Shruti Nair

Edited by Akul Nishant Akhoury

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