A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai
| Photo Credit: Reuters
Indian listed companies may struggle to replicate their strong first-quarter (Q1) earnings performance in the second quarter of fiscal 2027 as elevated commodity prices, pricing pressures and heightened macroeconomic risks weigh on their bottom lines, according to brokerage reports.Companies delivered a strong performance in Q1, with more than 70% either meeting or exceeding analysts’ earnings estimates, according to HSBC Equity Research. Aggregate earnings rose 16% year-on-year (YoY) during the quarter.Cautioning that the earnings momentum could weaken in the coming quarters, HSBC said “there’s a risk of downgrades in coming quarters as commodity prices stay elevated, while the lift from GST (Goods and Services Tax) cuts and inventory gains fade,” the brokerage said. The impact of further price increases on (consumer) demand remains another key risk.Commodity prices also rose during Q1, but companies were able to offset the pressure through calibrated price increases and inventory gains. HSBC expects this cushion to diminish, potentially putting pressure on earnings in subsequent quarters.Meanwhile, the prolonged geopolitical tensions in West Asia have added to macroeconomic uncertainty. Kotak Institutional Equities said a continued stalemate in the conflict, coupled with a prolonged blockade of the Strait of Hormuz, could create significant headwinds for economies and financial markets.“Oil markets have probably started to worry about dwindling oil inventories after being fairly relaxed about the outcome of the war,” Kotak analysts said. While elevated oil inventories before the crisis helped keep crude prices under control, that buffer could weaken if the Strait of Hormuz disruption persists.Domestically, inflationary pressures are also emerging as a concern. Consumer price inflation rose to 4.45% in July 2026, while the Reserve Bank of India’s latest monetary policy signals have raised concerns over the inflation outlook.Motilal Oswal, too, indicated in its report that strong earnings and a moderation in FII selling are likely to keep market performance buoyant, albeit with the caveat of “ebbing geopolitical uncertainties.” Published - August 25, 2026 05:58 pm IST
