Strong Surge Expected in Nifty 50 EPS Growth for FY26: Motilal Oswal Report

A recent report by Motilal Oswal Financial Services has painted an optimistic picture of India’s equity markets. According to the analysis, Nifty 50 EPS growth is expected to rise by 10% in the financial year 2025-26. The projection underscores India’s resilient corporate earnings momentum and continued macroeconomic stability.

Key Highlights of Nifty 50 EPS Growth Projection

• Motilal Oswal forecasts a 10% increase in Nifty 50 EPS for FY26, despite global uncertainties.
• FY25 EPS growth is also expected to remain healthy, at around 14%, setting a solid base.
• The strong performance is likely to be led by banking, capital goods, auto, and oil & gas sectors.
• Companies are benefiting from declining raw material costs and improving operating leverage.
• Consistent GDP growth and structural reforms support long-term earnings visibility.
• Increased capital expenditure by the government and private sector is boosting earnings potential.
• Stable interest rates and moderating inflation are improving business margins across sectors.
• Export-oriented sectors are gaining from currency stability and favorable global trade dynamics.

Sector-Wise Drivers of Nifty 50 EPS Growth

• Banking & Financials
  • Credit growth remains strong, particularly in retail and SME segments.
  • Lower credit costs and rising net interest margins improve bottom-line numbers.
  • PSU banks continue to show balance sheet improvements and better asset quality.
• Automobile & Auto Ancillaries
  • Demand recovery in both domestic and export markets is lifting volumes.
  • EV transition opens up new revenue streams for component manufacturers.
  • Lower input costs are enhancing profitability across the sector.
• Capital Goods & Infrastructure
  • Strong government focus on infrastructure drives order book expansion.
  • Healthy private capex cycle contributes to sustainable EPS visibility.
  • Increased localization is improving supply chain efficiencies.
• Oil & Gas
  • Refining margins remain stable; gas consumption is rising steadily.
  • Marketing companies benefit from relatively stable crude oil prices.
  • Policy support for cleaner fuels and energy transition enhances medium-term growth.

Market Outlook Based on Nifty 50 EPS Growth

• Valuation levels remain attractive given the consistent earnings trajectory.
• The EPS growth acts as a cushion against external volatility like Fed policy or global oil prices.
• Equity inflows are expected to rise as investor confidence improves post-Q2 FY26 results.
• Analysts expect mid- and small-cap stocks to follow large-cap EPS momentum.
• The report reinforces the structural bullish view on Indian equities over the medium term.

Risks and Considerations to Nifty 50 EPS Growth

• Any adverse movement in crude oil prices may impact inflation and input costs.
• Geopolitical instability or trade tensions could disrupt export earnings.
• Delay in private capex or policy execution may slow sector-specific earnings.
• Unpredictable monsoon or rural demand weakness can impact consumption-driven sectors.

What Investors Should Watch for in FY26

• Quarterly earnings performance of banking, auto, and infra stocks.
• RBI’s stance on interest rates amid evolving inflation data.
• Budget announcements and reforms targeting manufacturing and export competitiveness.
• Global cues, especially from the US Fed and Chinese economy, may influence earnings sentiment.

Conclusion
The Motilal Oswal report adds to the growing optimism around India’s economic recovery and corporate health. A projected 10% rise in Nifty 50 EPS growth for FY26 signals a period of earnings-led market strength. While external challenges persist, India’s internal fundamentals appear robust enough to deliver consistent growth, positioning investors for potential long-term gains.