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Stability and resilience are prized by markets in times of uncertainty. Two of the Nifty 50 index’s biggest constituents are reflecting this trait in the current results season. Banks, which were feared to face pressure on profit margins, are coping up with market challenges reasonably well, writes Aparna Iyer in this piece.
Cost of borrowings is not out for control and easing liquidity conditions can support profit margins. “Given the resilience of margins in the second quarter, the outlook for profitability has improved for banks now,” adds Iyer. Banking stocks are among major gainers in Thursday trade.
The other Nifty index constituent that is displaying resilience is the IT services industry. Revenues have not fallen off the cliff. Large companies have reported decent order wins and exuded confidence about overall business growth in the AI era. Notably, financial services, a large business segment of Indian IT, is seeing positive deal momentum as our Chart of the Day explains.
The latest clarifications on H-1B visas are expected to limit the damage to IT companies and come as a relief for investors. Furthermore, if the US-India trade deal progresses towards closure, it can normalise relations between both the countries. No wonder, the Nifty IT index is the biggest gainer among sectoral indices in Thursday afternoon trade.
The uptick in IT, bank stocks and equity markets comes on the back of muted earnings expectations in the run-up to the results season. Benchmark stock market indices are yet to see any major earnings upgrades. However, the initial September quarter results are not as bad as feared. With festive season seeing good sales, expectations of a better second half of FY26 are rising in the market.
“We believe the earnings trajectory should bottom out, with a H2 FY26 recovery expected on the back of the consumption recovery,” analysts at Emkay said in a note. As per Emkay, consensus earnings estimates of Nifty index stabilised in the last one month, even though much also depends on the corporate results that are yet to come.
Investing insights from our research team
Why should investors consider DCB Bank despite a sharp post-earnings rally?
Acutaas Chemicals: Margin guidance upgrade adds to the shine
Metro Brands: Growth to accelerate in H2
What else are we reading?
HUL Q2 Quick Take | Will new chief’s focus on volume-led growth win over investors?
Following the Smart Money: What Q3 VC funding reveals about AI dominance, India's innovation gap
Will electronics industry’s hi-tech value addition bid succeed?
Elon Musk really deserves that $1 trillion bonus package (republished from the FT)
India’s $12 billion deep tech fund is a great start; now we need other structural changes
Here’s how to ramp up India’s nuclear capacity
Delivery Diaries | Festival without boundaries: how India eats together
Markets
FIIs to come back? Valuation reset, earnings revival may draw flows back to India
Tech and Startups
AI in BFSI still in early experimentation stage: Perfios CEO Sabyasachi Goswami
Technical Picks: Syngene, Bandhan Bank, PPLPharma
R Sree Ram
Moneycontrol Pro
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