Overview: What to watch in the Week of Q2 FY26 earnings and trade deals
The Indian equity market often moves on a mix of earnings, policy signals, and global cues. As the second quarter of FY26 concludes, investors are parsing quarterly results, guidance from major corporates, and fresh signs from trade negotiations that could steer the broader indices, including the Sensex and Nifty, in the coming days. This week is likely to be dominated by five driving factors that could determine short-term direction and sector leadership.
Trigger 1 — Q2 FY26 earnings season: guidance matters more than beat rates
India’s quarterly results season for FY26’s second quarter is in focus. Analysts will be dissecting earnings beats or misses and, more importantly, management commentary on demand trends, margins, and capital expenditure plans. Companies that signal resilient revenue growth, disciplined cost control, and improving cash flow could attract buying interest, while signs of margin erosion or weaker demand may weigh on stock prices. Investors will particularly watch sectors with outsized exposure to domestic consumption, IT services, and financials, where earnings visibility remains a key concern or a source of reassurance.
Trigger 2 — Trade deals: tariff shifts, export policy, and supply-chain realignments
Trade negotiations and policy moves at the national level can trigger swift re-pricing across the market. Any breakthrough on export-oriented sectors (such as IT services, pharma, and specialty chemicals) or favorable tariff structures can lift sentiments and support a rally in export-heavy names. Conversely, signs of protective measures or supply-chain frictions could prompt risk-off moves in related stocks. Market participants will track announcements from policymakers and negotiators regarding tariff concessions, import substitution strategies, and incentives that could alter the competitive landscape for Indian manufacturers and service providers.
Trigger 3 — Domestic policy and liquidity environment: RBI signals and rate expectations
The monetary policy stance and liquidity conditions in India shape risk appetite and sectoral performance. While a policy rate change may not be imminent, subtle shifts in guidance, inflation projections, and liquidity management can influence equity flows. A softer stance on inflation with cautious optimism on growth could bolster equities, particularly in financials and real estate, while a hotter inflation print or hawkish commentary might temper enthusiasm. Traders will assess central bank commentary for the outlook on interest rates, currency stability, and credit growth, all of which impact valuation multiples across industries.
Trigger 4 — Global cues and crude oil dynamics: a tailwind or headwind for India
Global market momentum, commodity prices, and currency movements often feed into Indian equities as well. A pullback in global tech peers, resilient demand in developed markets, or a stabilization of crude oil prices can boost risk appetite. On the flip side, a spike in oil prices or a stronger dollar could pressure import-heavy sectors and widen trade deficits. Investors will weigh global macro surprises against India’s growth narrative to determine the pace of rotation between cyclical and defensives sectors.
Trigger 5 — Sector rotation: IT, BFSI, cement, and consumer discretionary in focus
Certain sectors tend to outperform during a quarter that blends robust earnings with positive policy signals. IT services may benefit from resilient demand and deal wins, while BFSI (banking and financial services) often leads on earnings quality and balance-sheet improvement. Cement and construction materials could ride on infrastructure optimism, and consumer discretionary names might outperform if rural and urban consumption shows strength. Market participants will look for clear catalysts within these sectors—whether in order flows, pricing power, or cost control—that could drive stock-specific gains and a broader market tilt.
How to approach this week as an investor
With a confluence of earnings and policy triggers, a balanced approach works best. Start with a core allocation aligned to the long-term growth story of India, and use the earnings season to fine-tune exposure to earnings-quality names. Keep an eye on risk management: set stop losses, monitor macro surprises, and avoid over-concentration in one theme. The week’s outcomes will likely hinge on the clarity of guidance from major firms and the speed at which trade talks advance.
Bottom line
The coming week for Indian markets could hinge on Q2 FY26 earnings guidance, trade-deal developments, and nuanced policy signals. Traders and investors who align portfolios with these triggers—while maintaining disciplined risk controls—may be well positioned to navigate potential volatility and capture early momentum in the market.
