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In 2QFY26, Nifty50 EPS grew 8.4% YoY (vs. expectation of +4.4% YoY). Ex-financials, EPS grew 12.4% YoY (vs. expectation of +10.8% YoY). Following the 2QFY26 results, our Nifty50 EPS has been increased for FY26E and FY27E by 0.2% and 0.5% respectively. Consequently, our Nifty50 EPS growth for FY26E now stands at 7.9% (vs. 7.7% earlier), and for FY27E it stands at 15.9% (15.5% earlier); hence, the ask rate for the balance 6 months of FY26 stands at 7%. In FY26, sectors that are expected to do the heavy lifting are: Oil & Gas, Metals and Mining, IT Services, Telecom, Infrastructure and NBFC. Further, if we split 2QFY26 performance in terms of market capitalisation, we see that the proportion of misses was the largest in smallcaps, followed by mid-caps and then large caps; 32% of small-cap companies missed expectations, while the misses were lower in mid-caps and large caps at 27% and 26% respectively.

* 2QFY26 Nifty50 EPS growth at 8.4% YoY: After growing 9.5% YoY in 1QFY26, Nifty50 EPS grew 8.4% YoY in 2QFY26 (vs. expectation of 4.4% YoY). Ex-financials, EPS grew 12.4% YoY (vs. expectation of +10.8% YoY). The worst-performing sector was Internet, which declined 63.1%. Further, on a YoY basis, sectors that saw the highest EPS growth were: (1) Metals & Mining (+132.3%), (2) Telecom (+111.2%), (3) Consumer Retail (+59.1%), (4) Healthcare (+40.4%), (5) Cement (+28.9%) and (6) Ports and Logistics (+24.5%).

*Sectoral beats and misses amongst the Nifty50: Industrials, healthcare and metals & mining stood out with a beat of 24.1%, 22.1% and 17.9% respectively, while Consumer Retail at - 23.9%, Internet at -15.7%, Utilities at -12.8%, Infrastructure at -9.2% and Ports and Logistics at -8.3% were key misses.

*EPS estimates increased for FY26E and FY27E: Following the 2QFY26 results, our Nifty50 EPS has been increased for FY26E and FY27E by 0.2% and 0.5% respectively. Consequently, our Nifty50 EPS growth for FY26E now stands at 7.9% (vs. 7.7% earlier), and for FY27E it stands at 15.9% (15.5% earlier). With this, the ask rate for the balance 6 months of FY26 stands at 7%.

* Which sectors have to do the heavy lifting in FY26E? We forecast 7.9% YoY growth in FY26E Nifty50 EPS. Sectors that are expected to do the heavy lifting are: Oil & Gas (+21% YoY growth, and 11.1% weight in Nifty50 PAT); Metals and Mining (+30% YoY growth and 4.9% weight in Nifty50 PAT); IT Services (+9% YoY and 10.2% weight in Nifty50 PAT); Telecom (+86% YoY growth and 3.0% weight in Nifty50 PAT); Infrastructure (+24% YoY growth and 3.2% weight in Nifty50 PAT) and NBFC (+11% YoY and 6.4% weight in Nifty50 PAT)

*JMFL coverage universe EPS grows 9.9% YoY in 2QFY26: The JM Financial coverage universe 2QFY26 EPS grew 9.9% YoY. Sectors that saw the highest YoY EPS growth were: (1) Hotels (+803% YoY), (2) Metals and Mining (+84% YoY), (3) Cement (+51% YoY), (4) Oil and Gas (+32% YoY), (5) Healthcare (29%), (6) Industrials (29%) and Life Insurance (27%). Sectors that saw the weakest YoY EPS performance included: (1) Textile (-63% YoY), (2) Automobiles (-27% YoY) and (3) Real Estate (-21% YoY). Compared to estimates, the largest beats were seen in Telecom, followed by Life Insurance, Textiles and Auto Ancillaries. Among the misses, Internet, Consumer Retail and Media led the pack.

*Small caps had higher share of misses: Out of the 50 companies in the Nifty50, 28% missed estimates in 2Q while 40% beat estimates and the rest reported an in-line quarter. Further, if we split 2QFY26 performance in terms of market capitalisation, we see that the proportion of misses was the largest in small caps, followed by mid-caps and then large caps; 32% of smallcap companies missed expectations, while the misses were lower in mid-caps and large caps at 27% and 26% respectively.

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