The report says that the broader consumption demand could still take one or two quarters to get back on track
While highlighting that some breather is expected in the first quarter of the current fiscal year (Q1FY26) on account of sequential improvement in some of the pockets of high-frequency indicators, a report has stated that the broader consumption demand could still take one or two quarters to get back on track.
In its report, Axis Securities noted that most of the earnings-related concerns are now behind us, and the intensity of downgrades is likely to slow down from here onwards. However, the market is still one or two quarters away from the potential upgrades, the report added.
“Most of the meaningful actions are likely in the second half of the current financial year, which is likely to be linked with the potential uptick in the economic momentum. Overall, the improvement in earnings is expected in certain pockets such as telecom, financials, materials, oil and gas, and industrials sectors,” Axis Securities highlighted in the report.
Volume growth for fast-moving consumer goods (FMCG) companies under coverage is expected to remain soft, continuing the trend seen in Q4FY25, with rural markets outperforming urban regions due to persistent urban demand weakness. However, with an improving outlook, the guidance and commentaries need to be keenly monitored, as per the report.
The report mentioned that the Q1FY26 earnings season was marked with interesting events such as geopolitical tension, volatility in crude prices, interest rate cuts, unseasonal rainfall, supply chain disruptions, and improving liquidity. These developments indicate Q1FY26 earnings season is expected to exhibit a mix trend, similar to the patterns observed in previous quarters, it added.
“Despite external risks, India’s domestic growth trajectory remains intact, with key macroeconomic factors supporting a stronger FY26 compared to FY25. Both the Reserve Bank of India (RBI) and the government are providing support to the Indian economy through policy measures that are pro-growth in nature,” the report stated.
At the current juncture, macroeconomic risk will continue to drive the market direction for another couple of months. However, the majority of the negatives related to trade uncertainty are behind us, the report pointed out.
The report explained that after a subdued performance in the first half of FY25, with growth of only 2 to 3 per cent YoY, cement demand witnessed a notable recovery in Q3 and Q4FY25, with a high single-digit growth. This positive momentum is expected to sustain into Q1FY26, supported by increased government capital expenditure and a revival in construction activity.
