The domestic market benchmark Nifty 50 is down for a seventh consecutive session, marking its longest losing streak since September 2025. In intraday trading on Wednesday, the index declined below 24,050, inching closer to the psychologically crucial 24,000 mark, and lost more than 2% over seven days.
The bigger concern is that the market is failing to respond to better-than-expected Q1 earnings and expectations of a further recovery in corporate earnings.
The West Asian conflict has kept oil prices elevated this month, raising concerns about its impact on India’s fiscal position. As the world’s third-largest crude oil importer, India meets around 80–85% of its oil requirements through imports, leaving its economy vulnerable to sustained increases in global oil prices. Higher crude prices could also fuel inflation, increase the chances of interest-rate hikes, and weigh on economic growth and corporate earnings.
Q1 earnings review
Brokerage firm Motilal Oswal Financial Services highlighted that the Q1FY27 earnings season concluded on a strong note, led by financials, metals, oil and gas (excluding oil marketing companies), automobiles, chemicals, textiles, and real estate.
“The Nifty delivered an 18% YoY profit after tax (PAT) growth versus our estimates of 10%, led by ONGC, Hindalco, Reliance Industries, JSW Steel, and Bharti Airtel. These five companies accounted for 60% of the incremental YoY accretion in earnings. Conversely, InterGlobe Aviation, ITC, Dr Reddy’s Labs, Tata Motors PV, and Cipla dragged Nifty earnings lower,” said Motilal Oswal.
“The Nifty EPS estimate for FY27 was raised by 0.6% to ₹1,232, largely owing to Reliance Industries, Hindalco, ONGC, ICICI Bank, and SBI. The FY28E EPS was also raised by 0.3% to ₹1,425 from ₹1,422 due to upgrades in SBI, ICICI Bank, Hindalco, Bajaj Finserv, and Bajaj Auto,” Motilal Oswal said.
Choice Equity Broking noted that revenue for Q1FY27 for Nifty 50 companies (excluding financials) grew 21.7% YoY, while PAT grew nearly 4% YoY. Revenue for the quarter beat estimates by 0.8%, and EBITDA gave a 2.5% beat, growing 9.0% YoY.
“We believe that while demand remained robust during the quarter, margin contraction was lower than expected as companies were able to successfully pass-through part of the price hikes resulting from the West Asia conflict,” said Choice Equity Broking.
Brokerage firm JM Financial said in Q1FY27, Nifty 50 EPS grew 12.9% YoY, versus the expectation of 4.5% YoY. The brokerage firm now expects Nifty 50 EPS to grow 15.2% in FY27E and 17.6% in FY28E.
“Following the Q1FY27 results, our Nifty 50 EPS estimates have decreased marginally for FY27 by 0.4% and increased slightly for FY28 by 0.3%. Consequently, our Nifty 50 EPS growth for FY27E now stands at 15.2% versus 15.6% earlier and for FY28E at 17.6% versus earlier 17.3%,” said JM Financial.
Why is the stock market still under pressure despite a healthy Q1 show?
The disconnect between decent earnings and a stalled index is what a market looks like when good news is already owned.
Vishnu Kant Upadhyay, AVP- Research at Master Capital Services, emphasised that elevated crude oil prices due to the unresolved West Asia crisis continue to keep investors on the sidelines.
“The uncertainty around oil supply and inflation is preventing a strong re-rating despite improving corporate earnings. Investors are now looking for confirmation from Q2 earnings. If the improvement seen in Q1 continues into Q2, it should provide greater confidence that the earnings cycle is becoming more stable,” said Upadhyay.
Harshal Dasani, Business Head at INVAsset PMS, highlighted that earnings met expectations rather than exceeding them, and in a market that had already priced in a second-half recovery, meeting the bar changes nothing.
Dasani further pointed out that the heavyweights are doing the damage, with HDFC Bank sliding for seven sessions and the index’s largest weights lagging even as breadth remains positive for a fourth month, which is precisely why the Sensex can drift while a thousand stocks advance.
Vinit Bolinjkar, the head of research at Ventura, pointed out that Q1FY27 earnings were better than expected, but the improvement has not translated into a broad market rally, as investors remain focused on earnings upgrades, valuations, and global risks.
The market is also dealing with a liquidity crunch.
“A ₹4.72 lakh crore IPO pipeline and events like the ₹31,000 crore LIC OFS are absorbing the very liquidity that would otherwise chase secondary-market highs,” said Dasani.
Macro concerns are also contributing to the market’s muted move.
The US Fed held 9-3, with a hawkish minority, and September odds remain elevated; crude keeps whipsawing amid West Asia tensions, and tariff clarity is pending.
Pranay Aggarwal, Director and CEO of Stoxkart, highlighted that unyielding hawkish commentary from the US Federal Reserve has kept global interest rates elevated, driving relentless cash-market selling by foreign portfolio investors (FPIs) in frontline large-cap stocks.
What can trigger a trend reversal?
Aggarwal underscored that while strong domestic SIP inflows and DII buying have continuously absorbed this supply to floor the market, a broad-based breakout remains capped by mounting external risks- specifically, escalating Middle East geopolitical tensions pushing crude oil prices back above $90 per barrel with no sign of resolution.
Aggarwal believes that for this consolidation phase to end, the market requires a de-escalation in global energy shocks, a trend reversal in FPI capital flows, and a clear monetary easing signal from central banks to relieve macroeconomic cost pressures.
Upadhyay believes that a more meaningful recovery can develop in Q3, provided crude remains manageable and earnings estimates continue to rise.
The real reversal will depend on other factors, rather than earnings alone.
According to Dasani, FPI buying is turning from a trickle into a trend, and the direction is already encouraging, with July selling down 95% from March.
Fed clarity in September that removes the hike overhang, and crude settling durably below $80 can help the market break the range decisively.
According to Bolinjkar, the next market upcycle will depend on FY27 and FY28 earnings upgrades, recovery in consumption and private capex, improved global liquidity, and sustained foreign inflows. Until then, markets are likely to remain stock-specific, favouring companies with strong earnings visibility, balance sheets and structural growth drivers.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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