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Why Strong Corporate Earnings Are Failing to Lift the Indian Stock Market
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CNBC TV18•07-10-2026, 17:55
Why Strong Corporate Earnings Are Failing to Lift the Indian Stock Market
- •Indian equities face a disconnect as strong corporate earnings are overshadowed by global headwinds, foreign investor selling, a weak rupee, and interest rate hikes.
- •Gautam Duggad of Motilal Oswal notes that corporate earnings are the strongest in three years with projected full-year growth of 16-17%, yet macro pressures dictate market sentiment.
- •Nifty is currently trading at around 17.5 times earnings, offering one of the lowest valuation levels in a decade outside of the pandemic period.
- •Stock selection remains crucial across market caps, with experts favoring diversified financials, capital markets, NBFCs, and selective mid-cap banks over large private lenders.
- •Experts suggest that while improving earnings provide a solid foundation, investors will need patience until global macroeconomic pressures and currency volatility ease.
Key Questions Answered
Despite strong corporate earnings showing the best first-quarter numbers in three years, Indian equities are weighed down by global headwinds, foreign investor selling, a weak rupee, and expectations of further rate hikes.
The RBI implemented a 25-basis-point rate hike and shifted to a calibrated tightening stance, signaling higher interest rates for longer. While this adds near-term pressure and weakens the rupee, experts believe equities can absorb further rate increases relatively quickly.
Gautam Duggad favors capital-market companies, NBFCs, selected mid-cap banks like AU Small Finance Bank and RBL Bank, and PSU banks including SBI. Mid-cap companies are anticipated to deliver strong earnings growth for the third consecutive year.
