India enters long-awaited earnings upgrade cycle, Nifty poised for 29,000 level
India appears to be entering a long-awaited earnings upgrade cycle, driven by resilient corporate performance, strong festive demand, supportive policy actions, and an improving macroeconomic environment, a report said on Wednesday.
After five consecutive quarters of downward revisions, Nifty earnings have finally reversed course, showing upgrades of 0.7 per cent, 0.9 per cent and 1.3 per cent for FY26, FY27 and FY28, respectively.
"This marks a significant shift in sentiment and establishes early but clear signals of a broad-based revival in corporate profitability," according to the report by PL Capital.
Nifty has risen 4 per cent in the past three months, breaking out of a prolonged consolidation phase.
According to the report, this shift to better-than-expected second quarter (Q2 FY26) corporate earnings, hopes of progress in resolving tariff disagreements with the United States, and a visible resurgence in domestic consumption during the ongoing festive and wedding season.
This revival is also supported by the GST rate rationalisation introduced in September 2025, which reduced effective retail prices across several consumer categories and boosted spending across urban and rural markets.
Using a 15-year average PE of 19.2 times and a September 2027 EPS estimate of 1,515, the report estimated the 12-month Nifty target at 29,094, with a bull-case valuation of 30,548 and a bear-case scenario of 26,184.
The model portfolio remains overweight on banks, healthcare, consumer goods, automobiles, and defence, while maintaining underweight positions in IT services, commodities, and oil and gas, the report said.
Corporate earnings for the quarter have been resilient. Companies within the coverage universe recorded growth of 8.1 per cent in sales, 16.3 per cent in EBITDA and 16.4 per cent in profit after tax (PAT).
"Importantly, EBITDA and PAT surpassed estimates by 5 per cent and 7.1 per cent respectively, leading to the first upgrades in NIFTY EPS since August 2024," the report noted.
Sectoral performance was notably strong for hospitals, capital goods, cement, electronics manufacturing services (EMS), ports, NBFCs, and telecom.
Commodity-linked sectors, particularly cement, metals, and oil and gas, posted robust profit expansions in the range of 33–58 per cent.
While government capital expenditure has been a major pillar of economic momentum over the past four years -- growing more than threefold since the pandemic -- the report cautions that the second half of FY26 may see some moderation.
Capital spending in the first half of the current financial year (H1FY26) has already reached 52 per cent of the annual target, compared with 41 per cent in the previous year.
However, the combination of GST rate rationalisation, higher fertiliser subsidies, and modest direct tax collections could limit the government’s ability to overshoot its current capex budget.
