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Nifty 50 Earnings: Early trend suggest earnings are resilient

ICICIdirect Research 23 Jan 2026 DISCLAIMER

10 Nifty companies have declared results till date largely in the domain of IT and Private Banks
 
Earnings have largely been flattish with topline growth pegged at 8% YoY.
Earnings for Q3’FY26 includes an element of exceptional costs related to provisioning with respect to change in labour code.
 
Adjusted for this, earnings growth is pegged at 7% YoY
IT and Banking sector PAT growth till date stands as 9% on YoY basis
Reliance reported flattish performance and there is no labour code related provisioning in its numbers.

IT Sector
We see early signs of stabilisation, despite continued headwinds from US macro uncertainty, tariff risks and geopolitical tensions as Q3 results so far have reflected early green shoots for the IT sector wherein the large caps have delivered 0.6% to 4.2% QoQ CC growth with HCLTech and LTIM outperforming its peers.
On the margins front, EBIT margins adjusted for new labour code impact have broadly remained resilient with flattish to marginal growth QoQ. Select pockets of growth emerged across verticals and geographies, with improving deal activity and higher large-deal TCV wins indicating better demand visibility compared to the previous few quarters.
We also feel that valuations have turned more supportive after a prolonged 1–3-year period of correction and IT services stocks are now trading closer to long-term historical averages, with risk-reward turning favourable for long-term investors. Current valuations appear to factor in a conservative growth outlook, providing downside protection while offering upside optionality as demand normalises.
We remain selectively positive on the sector, favouring companies with superior growth visibility, strong deal pipelines and execution track records. Large caps offer stability and balance sheet strength, while select mid-caps provide above-industry growth potential.  

Banking Sector
In the banking space, credit growth has improved to ~10–12%, driven by continued traction in retail and MSME segment, with strong competitive intensity in home and auto loans.
Asset quality remains resilient across segments, with stress in MFI and unsecured retail largely bottoming out. Margin sustainability has been aided by deposit repricing, higher CD ratios (up 100–250 bps QoQ) and CRR-related liquidity benefits, though some moderation is possible in Q4FY26 as the recent 25 bps repo cut transmits.
Private banks: Private banks delivered steady operating performance across margins, efficiency and return ratios. However, earnings for some lenders saw volatility due to seasonal Agri-related stress, labour-code linked cost provisions & incremental regulatory provisioning by the central bank, even as underlying business momentum and asset quality trends remain intact.
PSU banks: PSU banks continue to report sustained RoA, supported by healthy RAM-led credit growth, relatively better liability performance aiding margin stability (helped by deposit repricing and higher share of MCLR-linked loans) and benign credit costs. The improving granularity and balance-sheet strength reinforce earnings durability at current valuations

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