Summary:
Indian markets faced a volatile FY26 with FII outflows, rising crude prices and rupee weakness pressuring indices. However, Q4 FY26 earnings revealed stronger corporate fundamentals than headline market performance suggested. Banking, IT and capital market companies showed resilience, offering clearer signals for FY27 investors.
FY26 was not an easy year for Indian markets. The Nifty 50 ended the financial year with a decline of around 4-5%, a reversal from the gains of the two years prior. The India VIX, a measure of market volatility, more than doubled during the year, at one point touching a high of 28.90. Foreign institutional investors pulled out roughly ₹3.33 lakh crore from Indian equities over the course of the year, with March 2026 alone accounting for ₹1.22 lakh crore: the single largest monthly outflow on record.
The reasons behind this turbulence were largely external. A military strike by US and Israeli forces on Iran on 28 February 2026 sent Brent crude prices past $110 per barrel almost immediately. The rupee, already under pressure, fell to a record low of ₹95 against the dollar, its steepest annual decline since FY12. The RBI paused its rate-cutting cycle and maintained the rate at 5.25%.
And yet, beneath all of that, domestic institutional investors absorbed the selling; purchasing around ₹8.50 lakh crore in equities across the year. GDP continued to grow at roughly 7.4 to 7.6%. And when Q4 FY26 earnings season arrived in April 2026, the actual numbers told a more measured story than the index performance might have suggested.
Of the 214 companies that had reported results at the time of writing, 137 showed positive profit growth, 68 reported declines, and 9 came in flat. That is not a picture of broad distress. It is a picture of divergence, businesses with strong fundamentals holding up, while those already under pressure confirmed what markets had been pricing in for months.
The banking sector entered the results season as one of the more closely watched segments, given the contrast between PSU banks whose index gained over 26% in FY26 and private banks, whose index fell around 6-7%.
The early results broadly supported that divergence. HDFC Bank posted a profit after tax of ₹19221.05 crore in Q4 FY26, up 9% year on year, as post-merger integration continued to settle. ICICI Bank grew its quarterly PAT by 8.5%, showing clean asset quality and a diversified loan book. Bank of Maharashtra stood out with 35% PAT growth, part of the wider PSU banking recovery story. IndusInd Bank reported a PAT of ₹594 crore after posting a loss in the preceding quarter, though its governance concerns from earlier in FY26 mean investor confidence will take more than one quarter to rebuild fully.
The broader picture across banking is one of improving profitability and broadly stable asset quality. The RBI's accommodative stance and liquidity measures have created more room for credit growth heading into FY27.
No major sector had a worse FY26 than IT. The Nifty IT index fell over 20% during the year, as clients paused discretionary technology spending and concerns grew about AI-related disruption to traditional services demand.
The Q4 numbers suggest the sector found its footing faster than many expected. TCS reported revenue growth of 9.6% and PAT growth of 12.2%: a meaningful step up from the 5% revenue growth it posted in Q4 FY25. Infosys delivered 13.4% revenue growth and a 20.9% jump in profit. Persistent Systems, a mid-tier player, reported 25.1% revenue growth and 33.7% PAT growth. The pattern was consistent across the sector: revenue growth has re-accelerated, and profitability is recovering.
Some of that recovery reflects a weak base from the prior year, so the comparisons are flattering to some degree. But the direction is clear. Clients who had held back on technology investment during FY26 are beginning to release that spending, and AI-related work, building infrastructure, integrating tools into enterprise systems is starting to generate real revenue for the firms that invested early in repositioning their capabilities.
If any sector directly benefited from FY26's turbulence, it was the capital markets ecosystem. Higher volatility, elevated trading volumes, and continued SIP inflows created a strong operating environment for brokers, asset managers, and exchanges.
Billionbrains, the parent company of Groww, nearly doubled its revenue and more than doubled its profit year on year. Angel One grew PAT by 83.5%. CRISIL, which benefits from active credit and bond markets, posted nearly 46% PAT growth. The stockbroking segment, in particular, had one of its stronger earnings years, powered by the very volatility that frustrated equity investors elsewhere in the market.
Nestle India's Q4 numbers: 22.6% revenue growth and 27.18% PAT growth, represented its strongest quarterly performance in several years, helped by volume recovery and easing input costs. Trent continued its steady expansion in organised retail. The broader FMCG sector, whose index had fallen 15% in FY26, showed signs of volume recovery without fully resolving the structural competitive pressures from newer, focused consumer brands.
In specialty chemicals, Atul Ltd posted 66.1% PAT growth on 15.05% revenue growth, suggesting that margin pressure from raw material costs and Chinese competition may be beginning to ease. In power, Waaree Renewables more than doubled its revenue, showing strong demand across India's solar supply chain.
Q4 FY26 results have not erased the difficulty of the past year. But they have clarified something important: the index decline in FY26 was driven primarily by external shocks and sentiment, not by a broad breakdown in corporate fundamentals.
The businesses reporting strong Q4 numbers are, with few exceptions, the ones that entered FY26 with clean balance sheets, genuine competitive positions, and the capacity to adapt when conditions changed. The businesses reporting weak numbers are the ones carrying hidden vulnerabilities or business models that needed persistent tailwinds to sustain their valuations.
As FY27 begins, the earnings data from Q4 is the clearest available signal of which companies are worth backing and which require more patience. Geopolitical risks remain, and crude oil prices and currency movements will continue to affect sentiment. But the corporate earnings picture sector by sector, company by company is coming into focus again.
References:
https://www.5paisa.com/blog/india-fy26-economic-report-gdp-rbi-inflation-fii-outflows
https://underthemarketlens.substack.com/p/india-economy-fy26-analysis-growth-inflation-rupee-crude
https://www.sec.gov/Archives/edgar/data/1144967/000119312526153704/d24355dex99.htm
https://blog.liquide.life/nifty-50-outlook-weekly-market-review-april-2026/
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