Nifty earnings downgrades accelerated in April even as the benchmark index recovered from March lows. JM Financial, in its latest report stated that, says FY26 and FY27 earnings estimates fell 1.2% and 1.6% month-on-month, reversing the modest upgrades seen in March.
The brokerage says the broader earnings picture has weakened steadily over the past year. Between April 2025 and April 2026, Nifty 50 delivered a negative return of 1.4%, while FY26 and FY27 EPS estimates were cut by 7.3% and 5.7%, respectively.
That gap between market valuations and earnings momentum is beginning to widen. Stocks have stabilised after the March correction, but earnings revisions continue moving lower across sectors carrying the heaviest index weight.
JM Financial on Nifty strategy: Earnings cut widen across sectors
JM Financial says 33 out of 50 Nifty companies, or 66%, saw cuts in FY27 earnings estimates in April. Only 11 companies recorded upgrades.
The downgrades were broad-based.
All cement and insurance companies within the Nifty universe saw FY27 EPS cuts during the month. In banks and automobiles, four out of five companies saw downgrades. Consumer companies were also under pressure, with six out of eight firms witnessing cuts. Pharmaceuticals and infrastructure names saw reductions as well.
Sectorally, aviation recorded the steepest downgrade cycle with FY27 earnings estimates cut 16.7% month-on-month. Cement estimates declined 6.2%, insurance fell 4.8%, while automobiles, banks and consumer sectors also saw reductions.
By comparison, metals and mining remained among the few pockets still seeing upgrades. JM Financial says FY27 earnings estimates for the sector rose 1.5% month-on-month, while IT services and NBFCs recorded marginal upgrades.
The pattern is fairly visible now. Earnings cuts are spreading across domestic-facing sectors, while commodity-linked businesses and a few industrial names continue to hold up.
Banks remain the biggest earnings driver for the index
The report repeatedly points to one structural reality within the index: banks still dominate Nifty earnings weightage.
As of April 2026, banks account for nearly 37% of FY27 Nifty profit after tax estimates, according to JM Financial’s calculations.
That makes even small estimate cuts significant at the index level.
HDFC Bank’s FY27 profit estimate was cut 1% month-on-month, ICICI Bank’s by 1.5%, State Bank of India’s by 2.2% and Kotak Mahindra Bank’s by 2.5%, according to the report.
The pressure is not concentrated in one lender. The downgrades run across the banking pack at a time when credit growth is moderating and margin expansion is slowing after a strong cycle.
Even then, banks remain the largest earnings pillar for the market. JM Financial estimates Nifty FY27 profit at Rs 5.9 lakh crore from Rs 5.05 lakh crore in FY26, with lenders contributing the biggest share.
Consumer and auto stocks remain under pressure
Consumer-facing sectors, which were expected to benefit from improving rural demand and easing inflation, continue to see earnings downgrades instead.
JM Financial says six of eight consumer companies in the Nifty 50 universe saw FY27 EPS cuts in April.
Among the major names, ITC’s FY27 earnings estimate was reduced 1.1%, Hindustan Unilever’s declined 0.9%, Tata Consumer Products fell 1.3% and Trent saw a steeper 4.1% downgrade. Eternal recorded one of the sharpest earnings cuts in the index at 7.8%.
Nestle India stood out as an exception. The company saw FY27 EPS estimates upgraded 3.2% month-on-month, placing it among the top five upgrades in April.
Automobiles showed a similar trend.
Maruti Suzuki’s FY27 earnings estimate was cut 7.2%, among the sharpest reductions in the Nifty 50 pack. M&M, Eicher Motors and Bajaj Auto also saw downgrades, though smaller in magnitude.
Aviation remained the weakest segment. InterGlobe Aviation’s FY27 earnings estimate was slashed 16.7% month-on-month after a 46.5% downgrade in FY26 estimates.
Metals and industrials continue to hold up better
The report shows a widening divergence between consumption-linked sectors and commodity-heavy businesses.
Metals and mining companies continue to receive upgrades amid firmer commodity assumptions and better profitability expectations. Hindalco Industries saw FY27 earnings estimates upgraded 3.9%, while JSW Steel recorded a 4.8% increase.
Over a 12-month period, Hindalco emerged as the largest earnings upgrade within the Nifty 50 universe with FY27 EPS estimates rising 27.6%. Tata Steel, Adani Ports, M&M and Bharat Electronics also featured among the strongest upgrades over the past year.
By contrast, Eternal, InterGlobe Aviation, Trent, Grasim Industries and Cipla recorded the steepest earnings downgrades over the same period.
JM Financial’s sectoral data also shows infrastructure and ports maintaining relatively stable earnings momentum despite isolated estimate cuts in companies such as Larsen & Toubro and Adani Ports.
Valuations remain elevated despite earnings pressure
The downgrade cycle is unfolding even as Nifty valuations remain above long-term averages.
JM Financial estimates the Nifty currently trades at 21.7 times FY26 earnings and 18.6 times FY27 earnings. Based on FY28 estimates, the multiple moderates to 16.2 times.
The brokerage’s long-term valuation chart shows the index still trading above its historical mean one-year forward PE despite the correction seen earlier this year.
At the same time, earnings growth expectations are increasingly shifting further out.
JM Financial estimates FY26 Nifty EPS at 1,068 and FY27 EPS at 1,245 under its base-case assumptions. Bloomberg consensus estimates are slightly higher at 1,105 for FY26 and 1,293 for FY27.
That leaves the market dependent on stronger FY27 and FY28 recovery assumptions even as near-term downgrades continue.
JM Financial’s India strategy: Earnings momentum uneven
The broader message from the report is not that earnings are collapsing across the board. The problem is narrower, but persistent. Downgrades are spreading across heavyweight sectors while valuations still imply confidence in a stronger recovery ahead.
That leaves the market reliant on a smaller group of sectors for earnings support.
Metals, select NBFCs and some industrial names continue to see upgrades. But banks, consumer stocks, automobiles and cement together carry too much weight in the index for the downgrade cycle to be ignored.
For now, earnings revisions are still moving lower even as the market attempts to stabilise. Unless that trend starts reversing over the next few quarters, sustaining premium valuations for the broader index may become increasingly difficult.
Disclaimer: This article provides general market analysis based on third-party brokerage data and does not constitute a specific recommendation to buy, sell, or hold any security. Investors should consider the inherent risks of equity investments, including market volatility and sectoral shifts, before making any financial decisions. For personalized guidance tailored to your risk profile, it is advisable to consult a SEBI-registered investment advisor.
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