The PAT estimates for Q3 is around 1.7% growth. We have been saying that earnings growth is coming back and the GST cut might fuel it. Why is it not happening?

The growth has just started in different pockets plus there are some hits and misses as some input tax credits are not fully passed on.

- By: Rahul Singh, CIO-Equities, Tata Mutual Fund

It is definitely a structural positive but the impact of demand revival on earnings will probably come by fiscal 2027 and not really this year. In the last quarter we saw the starting signs of GST cuts working in the insurance and auto sector. Last year, Nifty 50 earnings per share growth was in the 3% range. This year, it is likely to be in the 7-8% range. And next year the expectations are around 15%.

Apart from banking and financial services which is likely to see a rebound in earnings growth, a material part of the index is linked to commodity prices and large stocks in the energy, metals, and mining are likely to see significant growth next year, which will provide further tailwind to Nifty earnings. Also, the downgrades in IT have stopped, even though there are no strong upgrades. So there is unlikely to be any drag on corporate profitability for IT companies. That is a relief, though not a growth driver.

The US is saying that if you buy Russian oil you will be taxed, and if you are buying anything from Iran, again there will be taxes. How do you view oil prices? Any impact on India?

Oil so far has not really been impacted by all this uncertainty. Oil demand has generally been weak, and it has been a well-supplied market. Demand is not going through the roof, so there is little fundamental risk of crude prices going up on a purely demand-supply basis. Geopolitically, however, the situation needs to be watched.

In India, crude acts as a hedge in the portfolio. If crude prices go up, macro gets impacted more than corporate earnings. To that extent, energy stocks can act as a hedge in the portfolio, but we do not have many pure-play exposure to oil prices in India.