Nifty-50 Faces Earnings Slowdown Amid Economic Uncertainties

The Nifty-50 index reported subdued earnings with a 5% YoY profit growth for Q3FY25. This marks the third consecutive quarter of sluggish performance, influenced by economic headwinds. Key sectors like BFSI drove modest growth, but challenges remain with reduced earnings estimates for FY26 and FY27.

The Nifty-50 index continues to grapple with lackluster earnings, recording a 5% year-on-year increase in profit after tax (PAT) for the quarter ending December 2024, as disclosed by Motilal Oswal's report. This marks a continued trend of subdued earnings, now persisting for three consecutive quarters.

According to the report, the single-digit growth underlines ongoing market corrections linked to a wider slowdown in corporate earnings. The index achieved only a 4% PAT growth over the first nine months of FY25, a stark drop from the more than 20% compound annual growth rate witnessed between FY20 and FY24.

Despite this, sectors such as banking, financial services, and insurance (BFSI), along with technology, telecom, healthcare, capital goods, and real estate, have contributed positively to earnings. However, the overarching trend indicates a deceleration in profit growth, raising questions about the stability of corporate earnings moving forward.

The report further highlighted downward revisions in Nifty's EPS estimates for FY26 and FY27 by 1.4% and 1.8%, respectively, due to company downgrades. This reflects broader economic challenges impacting profitability across sectors.

Analysts assert that navigating earnings growth amid global uncertainties and domestic market volatility will be critical for Nifty-50 firms in upcoming quarters. As market players evaluate the consequences of this slowdown, attention will focus on future macroeconomic indicators, policy moves, and the final quarter's corporate guidance. (ANI)

(With inputs from agencies.)