5 Nifty stocks drove 80% of Q1FY26 earnings growth. Is it time to Buy?

India’s equity markets continue to scale new heights, buoyed by investor optimism and robust corporate earnings. However, a deeper look under the hood of the Nifty50 earnings picture paints a more uneven reality. According to a recent analysis by Motilal Oswal, just five heavyweight stocks, Bharti Airtel, Reliance Industries, SBI, HDFC Bank, and ICICI Bank, accounted for a staggering 77% of the incremental year-on-year earnings growth for the index in Q1FY26.

While the Nifty50 posted a modest single-digit earnings growth for the fifth consecutive quarter, this growth was highly concentrated. The broad base of Nifty constituents struggled to keep pace, with many blue-chip names like Coal India, Tata Motors, IndusInd Bank, ONGC, HCL Tech, Kotak Mahindra Bank, Axis Bank, HUL, and Nestle either reporting flat or negative earnings contributions.

Motilal Oswal’s report indicates varied performance across sectors this quarter, the Banking sector delivered a steady yet subdued performance this quarter, with momentum slowing after a strong Q4. Margins (NIMs) came under pressure across the board—more significantly for private banks, owing to their higher exposure to repo-linked loans and rising slippages. Public sector banks also felt the squeeze due to faster loan repricing.

In contrast, the Auto sector saw its ancillary players take the spotlight. While overall revenue grew 4% year-on-year, largely driven by OEMs like Hyundai and Maruti, it was the auto component manufacturers who outperformed, clocking a robust 6% growth. Their earnings surprised on the upside, aided by non-core gains such as mark-to-market income.

The Consumer sector showed encouraging signs of revival, with revenue growing 8.3% YoY—beating expectations. Even when excluding ITC, the segment maintained a healthy 6.2% growth. Demand conditions remained stable, buoyed by easing inflation and a supportive monsoon.

Meanwhile, IT Services continued to face headwinds. Growth remained tepid, with median revenue inching up just 0.8% quarter-on-quarter. Cautious enterprise spending, global macro uncertainty, and GenAI-led productivity efficiencies continued to weigh on demand, keeping the sector’s outlook soft.

Buying Opportunity: What Analysts Say
According to Trendlyne’s consensus estimates, analysts remain bullish on India’s top large-cap stocks, with strong buy recommendations and attractive upside potential across the board. The optimism reflects confidence in the companies’ fundamentals and growth outlook over the coming months.

Bharti Airtel:
Out of 36 analysts, the stock has received a BUY rating, with a projected upside of 8%, supported by steady performance in the telecom sector.

Reliance Industries:
Endorsed by 34 analysts with a BUY recommendation, the stock is expected to deliver a 16% upside, reflecting positive sentiment around its diversified business and energy transition plans.

State Bank of India (SBI):
With inputs from 41 analysts, SBI holds a BUY rating and a 13.4% upside, driven by consistent earnings and improved asset quality.
HDFC Bank:
Receiving a STRONG BUY from 41 analysts, HDFC Bank is expected to see a 14.1% upside, backed by its strong retail franchise and stable asset profile.
ICICI Bank:
Topping the list, ICICI Bank has earned a STRONG BUY from 42 analysts, with the highest projected upside of 16.8%, thanks to its robust credit growth and improving margins.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)