Nifty 50 posted a 10% year‑to‑year rise in first‑quarter earnings, eclipsing the 6% consensus estimate and marking the strongest earnings performance in three years—yet the index slipped 3% following the RBI’s 25‑basis‑point rate hike and a 1.5‑point rupee depreciation.
While the overall index tumbled, the small‑cap segment surged 13% YTD, contrasting with the Nifty’s 7% decline; large‑cap exposure remained muted as investors shored up mid‑cap stocks that are projected to deliver close to 20% earnings growth for a third consecutive year.
Gautam Duggad, MD & Head of Sales at Motilal Oswal, said the earnings picture is considerably better than the market’s mood suggests and that companies with 20‑25% growth will continue to command premium valuations. He added that the Nifty is trading at roughly 17.5× earnings—potentially the lowest in a decade—making the current earnings uptick even more significant.
Foreign institutional investors are still in a holding pattern amid global headwinds: war, geopolitics, crude‑oil volatility and rising rates keep FII outflows high. The rupee, the worst‑performing currency year‑to‑date, hovered near 82.5 to the dollar, a 1.5‑point slide that has dampened risk appetite.
Looking ahead, Duggad projects full‑year earnings growth of 20‑25% for the Nifty, with the index likely to test the 18,000 level if global sentiment eases. Investors are advised to focus on high‑growth names across all caps while staying cautious of companies whose earnings are under 10%.