Stories
Inflation and weak monsoon threaten market recovery amid earnings concerns
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News18•12-10-2026, 11:30
Inflation and weak monsoon threaten market recovery amid earnings concerns
- •Indian stock markets face potential further weakness due to rising inflation, higher interest rates, and a deficient monsoon impacting consumer demand and corporate earnings.
- •A sharp V-shaped market recovery is unlikely in the near term, with persistent foreign investor selling and geopolitical uncertainty adding to market pressure.
- •The Nifty has declined significantly, making India one of the worst-performing major markets globally over recent weeks and the year.
- •PL Capital cut its Nifty earnings-per-share estimates for FY27 and FY28, citing input-cost pressures and risks to discretionary consumption after the festival season.
- •Preferred sectors include capital goods, healthcare, banks, metals, diversified financial services, telecom, and ports, while a cautious stance is maintained on automobiles, IT services, consumer companies, and oil and gas.
Key Questions Answered
Rising inflation, higher interest rates, and a deficient monsoon are threatening consumer demand and corporate earnings, contributing to a weak market outlook. Persistent foreign investor selling and geopolitical uncertainty are also adding pressure.
The Nifty has declined by 8.2 per cent over the past six weeks and 6 per cent since the beginning of 2026, making India one of the worst-performing major markets globally.
PL Capital prefers capital goods, healthcare, banks, metals, diversified financial services, telecom, and ports, while maintaining a cautious stance on automobiles, IT services, consumer companies, and oil and gas.
