India Strategy : Earnings and FII flows anchor India as global tech retreats by Motilal Oswal Financial services Ltd
India’s top market cap rankings reshuffle meaningfully
* Leadership among India's largest listed companies remained remarkably stable between Mar'23 and Mar'25, with Reliance Industries, HDFC Bank, and TCS consistently occupying the top three positions by market capitalization.
* Bharti Airtel entered the top three, rising to 2nd place after recording the fastest growth in both market cap and ranking over the past five years. In contrast, TCS slipped to 6th and Infosys to 12th amid AI-led deflation concerns in the IT services sector.
* Although the top three saw only one new entrant, the rest of the top 10 witnessed a notable reshuffling with no new entrant, reflecting intensifying competition among India's largest listed companies. Notably, ITC dropped out of the top 10, falling to 22nd place.
Mean reversion signals flash green for Indian equities
High-frequency indicators signal macro and earnings strength
* High-frequency macro indicators, including systemic credit growth, quarterly auto volumes, GST collections, and IIP, clearly point to a strengthening fundamental backdrop and a robust earnings cycle ahead.
* Following the moderation seen in 2025, systemic credit growth has rebounded to 18% YoY in Jul’26 (a two-year high), auto volumes are at their strongest levels since the 2022-23 peak, GST collections have consistently remained above INR 2tn, and IIP growth has accelerated to a two-year high. Together, these indicators reinforce our confidence in a strengthening macroeconomic environment
Interim review 1QFY27: OMCs temper Financials and Metal strength
* The earnings of the aforesaid 211 MOFSL Universe companies inched up 2% YoY (vs. our est. of a 10% YoY dip), primarily weighed down by OMCs. Barring OMCs, the MOFSL Universe posted a 17% YoY earnings growth (vs. our est. of +13% YoY). In contrast, ex-Financials earnings declined 8% YoY (vs. an est. of -24% YoY).
* The overall earnings growth was led by BFSI (+20% YoY), Metals (+53% YoY), Technology (+11% YoY), and Automobiles (+7% YoY). In contrast, earnings growth was hit by OMCs (loss of INR181b), Cement (-8% YoY), Healthcare (-6% YoY), and Interglobe (loss of INR3.8b).
* Earnings of the 39 Nifty companies that have declared results so far have grown 11% YoY (vs. our est. of +7% YoY). The earnings growth was led by Reliance Ind., JSW Steel, ICICIB, Bajaj Finance, and Axis Bank. Conversely, Interglobe, ITC, Dr Reddy’s Labs, Cipla, and Maruti Suzuki dragged Nifty earnings lower.
* The Nifty EPS estimates for FY27 and FY28 remained largely unchanged at INR1,225 (vs. INR1,225) and INR1,424 (vs. INR1,422), respectively.
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