In January 2025, many companies in India’s Nifty50 index faced problems as their earnings predictions were lowered. A report from JM Financial Institutional Securities showed that 72% of these companies had their earnings estimates cut, which was the biggest drop in months. This drop happened because businesses struggled to meet expectations for the third quarter.
Due to this poor earnings outlook, the Nifty 50 index finished January with its longest monthly losing streak in over 23 years. It has now decreased for four straight months, falling 9% since reaching a record high in late September. The market also faced pressure from foreign investors pulling out their money and worries about slower economic growth.
Earnings estimates for the years 2025, 2026, and 2027 were lowered by 1.4% to 2.8% in January. The insurance sector and the metals and mining sector saw the largest cuts, with earnings forecasts down 7.2% for each. The consumer sector was hit hard as well, with most companies in that space receiving downgrades. Banks and tech companies faced challenges, too, as five out of six banks and four out of five tech firms had their earnings outlooks reduced. However, pharmaceutical and industrial companies were slightly more stable, with less than a 1% downgrade.
Twelve out of the thirteen main sectors in the Nifty 50 index lost money in January, with the real estate sector doing the worst, dropping 12.5%. Even though companies are facing earnings problems, stock prices remain high, with the Nifty 50 trading at 19.6 times expected earnings for 2026 and 17.2 times for 2027. Analysts warn that if earnings growth continues to slow down while prices stay high, we could see more drops in the market.
On a brighter note, a few companies got upgrades in their earnings forecasts. For example, Adani Enterprises’ earnings estimate for 2026 was increased by 13.5%, while Kotak Mahindra Bank’s went up by 10.6%. Meanwhile, Tata Steel, Bajaj Finserv, and JSW Steel saw some of the biggest cuts, with Tata Steel’s 2026 earnings estimate being reduced by 16.7%.
Overall, the outlook for the Nifty 50’s earnings growth for 2025 has been adjusted to 3.8%, down from 5%. With earnings not improving and stock prices still high, analysts say the Nifty50 may have a tough time recovering soon. Unless companies start showing better earnings, Indian stocks might stay under stress in the coming months.
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