Increased Consumption Demand Could Potentially Require Two Quarters to Recover: Assessment by Axis Securities
The latest earnings report and analysis by Axis Securities offer insights into the current state of the Indian market, highlighting key factors and sector-specific trends that are shaping its trajectory.
## Key Factors Influencing the Market
The Q1FY26 earnings season has been marked by persistent geopolitical tensions, volatile crude oil prices, and ongoing uncertainty regarding interest rate trajectories. These factors have created a mixed trend in earnings performance across various sectors.
In terms of sectoral performance, Electronics Manufacturing Services (EMS) are projected to see explosive growth, with real estate developers and cement companies also expected to perform well. On the other hand, sectors such as Auto OEMs, metals companies, consumer goods, BFSI, and technology are facing challenges, with modest, single-digit growth or earnings declines.
Notably, the telecom sector is expected to turn profitable after previous losses, signaling a potential bottoming out for the sector.
## Expected Recovery Timeline for Broader Consumption Demand
Axis Securities notes that a broader revival in consumption demand is still "a quarter or two away," suggesting that the recovery will be gradual rather than immediate. High-frequency indicators for some sectors are showing sequential improvements, but these are not yet translating into a broad-based consumption demand recovery.
However, stronger growth is expected in the subsequent quarters of FY26, with analyst estimates pointing to double-digit profit growth from Q2FY26 onwards for covered sectors. Yet, Axis Securities remains more cautious, indicating that upgrades for the market as a whole are likely to be at least one or two quarters away.
## Summary Table: Market Outlook by Axis Securities
| Factor/Sector | Current Trend/Expectation | Outlook/Timeline | |------------------------------|---------------------------------------------|---------------------------------| | EMS, Real Estate, Cement | Explosive/profitable growth | Immediate | | Retail, Logistics, Healthcare| Double-digit gains | Immediate | | Telecom | Turning profitable | Bottoming out | | Auto, Metals, Consumer Goods | Earnings declines, sluggish growth | Continued pressure | | Broader Consumption Demand | Subdued, sequential improvement | 1–2 quarters away from revival | | Earnings Downgrades | Slowing down | No immediate upgrades expected |
In conclusion, while certain sectors are showing strong improvements, broader consumption demand in India appears to be at least a quarter or two away from meaningful recovery, as per Axis Securities' Q1FY26 earnings assessment. The upcoming earnings season will be significant in shaping the market direction, with management commentaries and forward guidance from companies playing an important role in shaping market sentiment going forward. Most of the concerns related to earnings have already been priced in, and meaningful improvements in the market and corporate performance are expected in the second half of the current financial year.
The earnings report and analysis by Axis Securities reveal that while sectors like Electronics Manufacturing Services, real estate, and cement show explosive growth or reliability, others such as Auto OEMs, metals companies, consumer goods, BFSI, and technology face challenges with modest growth or earnings declines. In terms of the telecom sector, a turn towards profitability is anticipated, indicating a potential bottoming out. However, Axis Securities forecasts that a broader revival in consumption demand is still a quarter or two away, indicating a gradual recovery rather than an immediate one.
