Early results from India Inc’s December quarter revealed a subdued earnings season due to one-time charges associated with the new labour code and other transitional expenses, according to industry analysts. Approximately 10 Nifty 50 firms, mainly IT companies and a few banks, have disclosed their results, showing no significant positive surprises. The transition to the new labour code, effective in November, which brought changes in wages, workplace safety, and social security, significantly affected corporate earnings.
TCS, Infosys, and HCL collectively bore over Rs 4,373 crore in one-time charges linked to the implementation of the new regulations, leading to a double-digit decline in profits for the quarter. Despite the immediate impact on profitability, IT firms experienced an uptick in demand, particularly with artificial intelligence transitioning from experimental phases to operational use, influencing deal pipelines and recruitment strategies. Several major IT companies have adjusted or raised their revenue forecasts for the year, with management comments from other firms emphasizing optimistic prospects related to artificial intelligence-driven growth.
In the banking sector, the Reserve Bank of India’s interventions concerning priority sector lending and adjustments in agriculture books had a negative effect on earnings, though analysts viewed these as short-term issues. Non-banking financial companies, auto manufacturers, and non-ferrous metal firms are anticipated to be the standout performers during this earnings season, as per analysts’ assessments. Notably, Tata Consultancy Services, Infosys, HCL Technologies, Tech Mahindra, Wipro, HDFC Bank, and ICICI Bank have already released their quarterly financial results.
A report from HDFC Securities projected a promising outlook for India in 2026, foreseeing double-digit nominal growth, declining rates, stable currency, and reduced global risks, setting a favorable stage for equities, particularly in metals, BFSI, capital goods, and defense sectors. The report anticipated a Nifty earnings growth of about 16% for FY27 in 2026, with a return expectation of around 11% and a year-end Nifty target set at 28,720.
