India Inc's Strong Start to FY26 Faces Reality Check

Analysts expect gains to remain concentrated in pockets, with some sectors continuing to lag

- Abhinaba Saha

India Inc has started FY26 on a stronger footing, with April-June performance expected to outpace the same quarter last year. Analysts attribute this to a favourable base, continuing recovery in rural demand and a timely monsoon—but warn that the improvement may not translate into broad-based earnings momentum just yet.

Domestic demand-driven sectors are expected to carry much of the weight in a quarter marred by external shocks, including US tariff threats, geopolitical tensions in West Asia and heightened cross-border tension with Pakistan.

"Rate-sensitive sectors like banks, NBFCs (non-banking financial companies), select auto companies and realty are likely to benefit," said VK Vijayakumar, chief investment strategist at Geojit Investments. "Aviation, telecom and hotels will continue to do well, while IT will remain a drag on earnings."

Jay Kothari, lead market strategist at DSP Mutual Fund, finds oil marketing companies (OMCs) and gas distributors tactically attractive. "Lower energy costs should improve OMCs' marketing margins in Q1, while export-linked sectors like IT, pharma and textiles may face near-term earnings headwinds," he said.