• Exports and Imports see sharp decline in March driven by different sectors

• Inflation continues to edge up, driven largely by Food

• Coal production declines in March, first time in 4 mths, dispatches also remain soft

• Bank credit and deposit growth accelerate in March but uptick could be spurious

• China’s trade surplus falls sharply in March as imports surge

Exports decreased 7% YoY in March, driven by over 20% decline in Gems & Jewellery and Pharmaceuticals exports and ~15% decline in Textiles exports. Electronics goods exports also declined in March. Petroleum goods were the sole exception, with exports growing 6% YoY – mostly reflecting higher prices rather than higher volumes.

Imports also declined by almost 7% YoY. But this was driven by an over 35% decline in Petroleum imports (despite the higher prices). Excluding Petroleum, imports rose 6% YoY with Machinery and Electronic goods imports seeing ~20% YoY growth in imports. Gold is the other category that saw a sharp decline in imports.

The sharp decline in both exports and imports meant that the trade deficit declined modestly on a YoY basis and at just under US$21bn, it was the lowest since June in absolute terms.

CPI Inflation continued to tick up, rising to 3.4% YoY in March from 3.2% in February and 2.7% in January. Food inflation continues to be the key driver of this uptick having risen from 2.1% in January to 3.7% in March. So core inflation remains modest at close to 3%. More importantly, this level is broadly the same as last year and so it is not base effect which is keeping inflation low.

Oil continues to be the wild card. So far, the Oil marketing companies have absorbed the impact of higher oil prices, especially the retail fuels. But it remains unclear if and when Oil prices return to the levels they were at a couple of months back. And until that happens, there remains material upside risk to inflation. In the last monetary policy meeting, the RBI’s projections were for inflation to rise closer to 5% in the next few months. This means that any discussion around interest rate cuts is, at least for now, off the table.

Domestic coal production growth declined by 4.1% YoY in March, the first decline in the last 4 months. On the demand side while coal dispatch growth was positive, it was subdued at less than 2% YoY. Sectoral trends suggest weakness in industrial sector demand: dispatches to the sponge iron sector declined 34% YoY, marking the 11th consecutive month of contraction.

On an annual basis, sponge iron demand fell sharply in FY26. Meanwhile, dispatches to the power sector declined ~4% YoY in FY26, aligning with moderation in thermal power generation growth to ~4% in FY26, compared to a higher growth rate in the previous year, indicating relatively softer coal-based power demand.

Lastly, bank credit growth has accelerated sharply to over 16% at the end of March from just over 13% at the start of the year. Deposit growth has similarly accelerated by ~3ppt and is now running at over 13%. Both credit and deposit growth are currently at the highest rate in the last few years.

Some of this is a year-end effect, as last year the data is not exactly as of 31st March due to the change in the definition of fortnight. So once mid-April data is available, we will better know if there is a real pick up in monetary data or just a year-end artefact.

China’s merchandise exports grew just 2.5% YoY in March 2026, down from 12.2% in March 2025 and marking a five‑month low. Imports, however, surged 27.8% YoY, reversing last year’s 4.3% decline. With imports rising much faster than exports, China’s merchandise trade surplus narrowed to $ 51.13 billion.

Trade with the U.S. remained weak: exports to the U.S. fell 26.5% YoY, while imports from the U.S. rose 2.1% YoY, ending a year‑long decline. As a result, China’s bilateral goods trade surplus with the US narrowed to $16.8 billion — its lowest level since March 2025.

That’s it for this week. See you next week…

• Capital flows are a problem and not just portfolio flows

• Bank credit has seen a sharp uptick

• Incremental Credit-Deposit ratio is close to 100%

• Rupee continues to depreciate against the USD and other currencies

• Core sector growth remains sluggish with petroleum being the key drag

• US trade deficit narrows sharply in January as exports rise and imports decline

The rupee is under pressure as capital flows have turned adverse. And while we are aware of the selling by FPIs, the challenges in capital flows are much more than just FPIs. NRI deposits, for example, which used to be a steady source of inflows, turned negative in January – there were net withdrawals of US$ 600 million. For reference, the last quarter of 2025 had seen inflows average US$1.7bn, so a delta of over US$2bn in January. Outward remittances have also, not surprisingly, increased. January saw US$2.7bn outflows under the LRS, up US$500mn compared to the preceding few months.

And FDI continues to struggle. January was the sixth consecutive month of negative net FDI. January saw a negative net FDI of US$1.4bn, the highest in the last 3 months. And this is in large part because the actual equity FDI received by India in January was at a 14-month low of US$2.7bn. For reference, the preceding 3 months saw India receive an average equity FDI of US$4.5bn, almost US$2bn higher.

The only component of capital flows that has improved in recent months is the ECBs. January saw ECBs totalling US$5.3bn being approved by the RBI, the highest since March last year. Some corporates are being brave (or contrarian?) raising overseas debt with the rupee is seeing sharp depreciation!

Credit growth has accelerated sharply in recent months. As of the end of February, overall credit growth had accelerated to over 15% YoY, almost 4ppt higher since November. Deposit growth has also similarly picked up, and at 13% it has similarly increased by ~4ppt in the last few months. The credit-deposit ratio is now running over 82%, and the incremental credit-deposit ratio is now running close to 100%. While it does not appear so, the banking sector is running red hot.

The rupee continues to depreciate against the US Dollar. However, as we have highlighted before, the big picture is of the rupee’s depreciation against most major currencies, not just the USD and the sheer quantum of decline. Thus, over the past year, while the USD Index fell by ~4%, the INR Index fell by 11%. The INR has thus fallen by over 10% against most major currencies.

What is surprising is that despite this, we have not seen a material increase in inflation. And this has allowed interest rates to continue to remain low. The recent rise in oil prices will complicate this picture, but at least in the short-term, the RBI is likely to see through any increase in inflation attributable to the rise in oil and gas prices.

The Core Sector grew by 2.3% YoY in February, slowing from the 4.7% growth recorded in each of the previous two months. Out of the eight industries that comprise the core sector index, three sectors registered a decline in growth. Natural gas production contracted by 5% YoY in February, marking the 20th consecutive month of decline. Similarly, crude oil production fell for the sixth straight month. In contrast, steel production showed strong performance, recording a 7.2% YoY growth in February.

Lastly, the US goods trade deficit narrowed sharply in January, declining by US$17.7 billion to US$80.8 billion on a seasonally adjusted basis. Exports grew by 13% year-on-year in January, up from a 6.8% YoY increase in the previous month. Imports declined for the sixth consecutive month in January, with the pace of decline rising to 16% YoY. US exports to China declined for the thirteenth consecutive month. Imports from China declined for 12 straight months.

• CPI Inflation rises to over 3% in February but continues to remain modest

• Oil prices rise to US$100/bbl and are up almost 50% YoY in INR terms

• India’s energy balance has worsened in the last few years

  • Domestic oil production has declined

  • Imports of Petroleum products, and not just crude oil, have increased

• China’s exports and imports are off to a strong start in 2026

CPI Inflation rose to 3.2% YoY in February, up from 2.7% in January. This is the highest reading since April last year. However at 3.2% it remains still remains below the 4% target set for the RBI’s Monetary Policy Committee. So despite the rise, CPI remains low and comfortable. This, however, is a rear-view mirror analysis. Since then, international Oil prices have shot up due to the hostilities in the Middle East. The price of Brent crude, which averaged U$71/bbl in February, has now crossed US$100 per bbl. If they sustain at this level, and given the sharp depreciation in the rupee in the last few months, this will translate to an almost 50% increase in Oil prices on a YoY basis in INR terms.

Petroleum products directly have a ~7% weight in the new CPI basket. So a 50% increase in prices will, ipso facto, push up inflation by ~3-4ppt, pushing CPI above the upper end of the MPC’s threshold of 6%. This, of course, assumes that the international oil prices are fully passed on to the consumers. They most likely will not, at least not in the short term. To begin with, it will be the Oil companies which will absorb the higher prices, and if prices remain high for more than a few weeks, then the Government will be expected to also chip in.

But petrol, diesel and LPG are just one source of impact of higher oil prices. Almost every manufactured item that we consume has some element of petroleum. And the services required to deliver those goods require petroleum. Suffice to say that such a sharp increase in prices, compounded by the fall in the rupee, will adversely impact the price system. And what might exacerbate this, at least in the short term, is the risk of shortages, which might cause production outages, curtailing supply. But given the uncertainty over how long and severe the disruption will be, it is not possible at this point to quantify the impact on either growth or inflation with any degree of precision.

But while we are discussing energy, it is worth noting how India’s energy dynamics have changed in the last few years.

India was and remains a crude oil-deficient but refining-surplus nation. What this means is that while India is a net importer of crude oil, it is a net exporter of refined products. In calendar year 2025, for instance, while India imported 250 million tonnes of crude oil, it exported, on a net basis, 15 million tonnes of petroleum products (imported 50 million tonnes and exported 65 million tonnes).

But both of these balances have worsened over the last decade. This is because while India’s energy demand has increased, domestic production has actually declined. In 2015, India’s domestic crude oil production was 37 million tonnes or 16% of total crude oil consumption (84% was imports). In 2025, however, domestic crude oil production had declined to 28 million tonnes, down 25%, and it now covers just 10% of the domestic crude oil requirement. So 90% of the crude oil is now imported.

And our excess refining capacity has also been whittled away in the last few years. In 2015, India’s exports of petroleum products stood at 59 million tonnes. And in 2025, India’s exports of petroleum products stood at 65 million tonnes, a less than 10% increase. India primarily exports Petrol and Diesel. But imports of petroleum products almost doubled during this period – from 27 million tonnes in 2015 to 50 million tonnes in 2025. And most of these imports are LPG (~45%) and Petroleum Coke (~25%).

And a similar story has played out in natural gas. Between 2015 and 2025, while consumption of natural gas increased by 40%, domestic production increased by just 10%. Consequently, imports of LNG doubled. And more than 50% of domestic consumption of natural gas is now sourced through imports.

Bottom line, India’s energy balance or petroleum balance has worsened. And thus our vulnerability to sustained dislocation in the global energy market, which was always high, has increased in the last few years. So at this point in time, we can simply watch how things unfold. Fingers crossed…

Lastly, China’s foreign trade is off to a strong start in 2026. Merchandise exports in the first two months of the year grew by over 20% YoY while Imports grew ~20% YoY. The trade surplus consequently expanded by over 25% YoY to over US$200bn during this period.

Trade with the United States weakened, with exports down 11% YoY and imports plunging over 25% YoY, reflecting the continued impact of tariffs. By contrast, exports to the European Union grew by over 25% and those to Southeast Asian nations surged by almost 30% YoY. Imports from these regions also rose sharply. Together, the data highlights China’s deepening ties with regional and European markets and underscore China’s ability to diversify trade partnerships and reduce reliance on the US amid ongoing geopolitical tensions.

That’s it for this week, see you next week…

In case you missed, we now track the active weights of mutual funds across stocks and sectors. Calculated by comparing the actual portfolio weight of every equity scheme relative to an appropriate basket of stocks that is representative of that scheme category. We build this data bottom up and so it is available at an individual scheme level and aggregate it up across all equity fund categories and the entire equity holdings of AMCs.

In this edition of This Week In Data, we discuss:

• New series of GDP is here and GDP seems to be humming along fine

• New series lowers growth rates for last two years and also lowers the size of the GDP

• Corporate tax collections have seen sharp acceleration in recent months while income tax collections remain sluggish

• FDI inflows improve sequentially but higher outward FDI keeps total FDI at modest levels

• Services exports continue to see strong growth and trade balance at record highs

• US Trade deficit widens sharply in December as trade with China continues to shrink

So India’s economy grew by 7.8% YoY during the December quarter, down slightly from the 8.4% growth during the September quarter. For FY26, the economy is likely to grow by 7.6% YoY, higher than the 7.1% in FY25 and 7.2% in FY24. This is as per the new series of national accounts released on Friday, with FY2022-23 as the base year. Key take away, the economy seems to be humming along fine.

The new series with newer and updated data sources, as well as revised methodology, closely aligns with the changes in the economy in the last decade or so. Not surprisingly, there is a significant change to growth rates earlier reported, and the key takeaway is that, in general, growth rates for the last 2-3 years have generally been revised downwards. This implies that the older series was overestimating growth, especially in FY24. Cumulatively over the past two years (FY24-25), the real GDP growth rate has seen a downward revision by ~70bps.

The other notable feature of the new series is that it actually reduces the size of the economy slightly. The nominal GDP under the new series is ~3-4% lower than that under the old series. Given that some of the scepticism over the earlier reported GDP data was due to the perception that they were overstating growth, this downward revision should help acceptance of this series amongst the sceptics.

Corporate tax collections more than doubled in January on a YoY basis. While January is not a large month for corporate tax collections, it will be the 4th consecutive month of strong growth in corporate tax collections. Over this period (Oct-Jan), corporate tax collections increased over 35% on a YoY basis as against a modest 1% growth during the six preceding months. This increase in corporate tax collections lines up with corporate profitability data, which has shown two consecutive quarters of double-digit growth.

Personal income tax collections have not seen an uptick though. The last 4 months have seen a personal income tax collections grow by 5% YoY, broadly the same growth rate as in the preceding 6 months.

FDI Inflows continue to improve sequentially. In the first 9 months of this year (Apr-Dec), FDI flows into India increased 50% YoY to US$29bn. This was driven by a 15% increase in gross inflows while repatriation of existing FDI was largely flat. That said, outward FDI from India is also rising – YTD this has increased by almost 35% YoY. And this has meant that in absolute terms, the FDI received by India, on a net basis, was a modest US$4bn between April and December of FY26.

Services exports have continued their strong momentum in recent months. January saw services exports grow 10% YoY, down slightly from the 13% growth in December but broadly the same pace as in the recent few quarters. Imports have surprisingly seen a sharp slowdown, with January seeing services imports being largely flat on a YoY basis.

January was thus the second consecutive month of over US$20bn services trade surplus, the highest ever. The backdrop for this, of course, is the rising risk of AI disrupting India’s IT exports. So, we will be watching this data closely over the next few months.

In December 2025, the US goods trade deficit widened sharply, increasing by $15.8 billion to reach $98.5 billion, a 19% MoM rise on a seasonally adjusted basis. This is the highest level of the deficit since July 2025. This increase was driven by a 3% MoM decline in exports, while imports rose 4% MoM (seasonally adjusted basis).

U.S. exports to China declined for the twelfth consecutive month on a YoY basis. Similarly, imports from China fell for the eleventh consecutive month. China’s share of total U.S. imports dropped sharply to 7.5% in December 2025, down from 13.2% in December 2024.

For the full year 2025, the US recorded a goods trade deficit of $1.23 trillion, which was 2.1% higher than in 2024 despite the imposition of tariffs aimed at curbing imports. During the year, goods exports grew by 6% YoY while imports increased by 4.6%.

That’s it for this week. See you next week…

For the quarter, revenues have grown by ~9% YoY. While slower than last quarter, this is the second highest growth in almost the last 3 years. Operating profits (EBITDA, ex financials) have seen double digit growth (~12%). And once again while growth was slower than last quarter, operating profit growth is the strongest in the last 2 years. Below the line items dragged down profit growth to 11%. Depreciation expense in particular has been a drag on profitability.

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends, highlighting what’s propelling growth this week.

• The second dives into standout company results shaping those numbers.

Aggregate Trends

Commodities is the standout on reported profit growth, with revenue and EBITDA both growing around 9% while PAT surged 47.9%, thanks to cost control and operating factors. Energy and FMCG are the clearest margin-led pockets. Energy posted 6.2% revenue growth, but EBITDA and PAT grew much faster at 20.5% and 30.4%, pointing to pricing discipline and operating strength. FMCG shows a similar pattern, with revenue at 9.6%, EBITDA at 12.7%, and PAT at 31.7%. When several sectors are struggling to convert topline into profit, both sectors stand out for stronger earnings transmission.

Consumer Discretionary remains mixed. Revenue growth of 9.9% indicates demand remains strong, but EBITDA growth is slow at 2.7%, with PAT nearly flat at 0.7%. Healthcare shows the same divergence in a sharper form. It is the fastest-growing sector in revenue, with EBITDA growth nearly as strong at 13.5%, yet PAT is at just 2.6%. So, while sector demand and execution appear strong, net profit is lagging due to non-operating or one-off factors.

Industrials and Services also fit the “activity strong, profits weak” pattern. Industrials posted 11.5% revenue growth and 16.7% EBITDA growth, but PAT declined 4.6%. Services tells a similar story, as revenue grew 8.8% and EBITDA 16.3%, yet PAT fell 16.9%. In both sectors, the operating layer looks far better than the bottom line, which makes EBITDA a cleaner signal than PAT.

Information Technology and Telecom remain the weakest pockets in profit conversion. IT delivered 9.6% revenue growth and 9.2% EBITDA growth, but PAT declined 6.9%. Telecom is the most stressed print in the set. Revenue and EBITDA growth are both near 9%, but PAT is -80%, indicating severe pressure below the operating line.

Financial Services is comparatively steady and, importantly, not distorting the overall earnings picture. Revenue, EBITDA, and PAT growth are all tightly clustered at 10.3%, 11.9%, and 11.4%, making it one of the cleaner sectors in terms of earnings conversion. Utilities, meanwhile, shows modest revenue growth at 3.3% but much stronger PAT growth at 27.2%.

Overall, with this week’s earnings added, our pattern is further reinforced. Growth remains broad-based, but profit quality is uneven across sectors. The aggregate numbers are healthy, yet sector dispersion is still high, and in several cases, EBITDA is telling a materially better story than PAT. The key takeaway, then, goes beyond the fact that revenues are growing; it is more about which sectors are actually converting that growth into durable profitability.

Company Spotlights

• ABB India Ltd. (Industrials): Revenue hit a record quarter with broad traction across electrification, motion, and automation, while profit momentum stayed softer as margins narrowed on input and labour costs. This appears tied to strong capex demand, with cost pressures still passing through.

• CIE Automotive India Ltd. (Consumer Discretionary): Revenue stayed strong on healthy OEM demand and volume growth, but profit rose at a slower pace as margins tightened under higher input and personnel costs. That mix seems to reflect solid scale, with cost pressure still weighing.

• Rane Holdings Ltd. (Financial Services): Revenue grew strongly, and operating performance improved, but the quarter slipped into a loss after a large warranty provision tied to a JV recall. The underlying business looks steadier than the headline profit print suggests.

• Brightcom Group Ltd. (Information Technology): Topline and profit growth were strong, helped by higher digital ad volumes and platform integrations, though margins narrowed as costs rose. That pattern may point to scaling-led expansion, with investment intensity still running high.

• Religare Enterprises Ltd. (Financial Services): Income growth remained strong, led by insurance and broking, but the loss widened as claims and operating costs ran ahead of topline expansion. This seems to reflect a business still scaling through restructuring pressure.

• KRBL Ltd. (FMCG): Revenue fell on weaker exports, but profit climbed sharply as margins expanded and costs stayed disciplined. It looks more like a margin-led quarter than a demand-led one, with export volatility still hanging around.

• Confidence Petroleum India Ltd. (Energy): Revenue nearly doubled on LPG growth, but profit fell as costs rose faster and margins compressed. This likely reflects a scale-heavy expansion phase, where volume growth is accompanied by a much larger cost bill.

• PTC India Ltd. (Utilities): Revenue was broadly flat, and trading volumes edged up, but profit dropped sharply as operating margins weakened and consultancy income softened. It seems the core power-trading business is facing tighter spreads, even with support from non-operating income.

The earnings quarter is almost at its end, and we’ll be taking a broad overview of this earnings season soon. Stay tuned!

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends, highlighting what’s propelling growth this week.

• The second dives into standout company results shaping those numbers.

Want to dig deeper? Download the extended edition for full sector-wise company data and detailed performance notes.

This Week In Earnings Q3 Fy26 04

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Aggregate Trends

The major theme currently is profit quality: how much of PAT growth is operating, and how much is exceptional-led. One thread runs across multiple sectors, i.e., labour-code implementation charges and other one-offs are repeatedly distorting reported profits. Hence, EBITDA trends are often healthier than PAT trends, and this is the gap to take notice of.

Starting with Commodities, which is the standout sector and reads like operating leverage plus cost control (in some cases, portfolio mix doing the work). Grasim is a good example of “mix helps momentum.” At the same time, the sector numbers are not a straight-line demand story. Hindalco shows how idiosyncratic events can overwhelm an otherwise decent operating quarter. In EID Parry, the sugar cycle remains choppy, but the non-sugar portfolio is cushioning results. As is often the case, stability increasingly comes from diversification.

Energy is another margin-led pocket, the dispersion arising from pricing and cost discipline. ONGC managed profit growth despite weaker crude realizations, suggesting steadier gas pricing and support from subsidiaries/JVs. IGL shows the steadier side of the demand picture, with volumes up 3–4% and selective CNG price hikes helping realizations. On the flip side, Coal India suffered from realizations softening simultaneously with rising costs: an uncomfortable combination if demand doesn’t re-accelerate.

Within FMCG, HUL’s headline profit surge was heavily boosted by an ice-cream demerger gain; the operating business underneath looks far more muted, with margins compressed as brand investments rose. The cleaner FMCG signals this week came from Britannia (profits growing faster than revenue as margins improve) and United Breweries (premiumisation and cost work lifting gross margin meaningfully). Patanjali Foods sits in the middle, with mix-driven improvement in FMCG/HPC scaling, but also a tax write-back flattering PAT.

Consumer Discretionary seems to be the most mixed sector in this quarter so far, with revenue +8.9% while PAT is essentially flat. Demand is clearly present, but it’s not consolidating into sector-level profit growth because results are being pulled in opposite directions. At one end, the festive/organised shift is obvious. Titan and PN Gadgil’s results read like peak-season operating leverage plus strong conversion and premium mix, even in a high gold-price environment.

Travel and hospitality are similarly buoyant: Indian Hotels converted a 12% revenue rise into a 51% profit jump with record hotel EBITDA and lofty margins. In autos and mobility, M&M and Eicher delivered strong volume-led quarters with margins holding up, suggesting mix and scale are still cushioning costs. But the sector’s flat PAT can be explained by charges and exceptionals. For instance, Amber Enterprises swung into a small loss on impairments and labour-code/Sidwal-related charges despite strong AC demand and improved EBITDA.

In Healthcare, the topline is the strongest of all sectors, but PAT is barely up. Execution is visibly strong at Lupin (US surge, sharp margin expansion), Torrent Pharma (broad-based geography strength with margins holding), and Apollo Hospitals (ARPOB/mix-led growth with integrated efficiency). But reported profits are clipped by labour-code liabilities and acquisition/consolidation costs at players like Zydus and Biocon.

The pressure points are clearest in the remaining sectors: Industrials, IT, Services, and Telecom. Industrials show high activity, but bottom lines are getting clipped by one-offs and financing burdens (labour-code charge at Ashok Leyland, leverage stress at Uflex). Services show strong operational growth at big operators like GMR Airports, but expansion-related interest and depreciation keep PAT under pressure. IT looks stable on revenue, but profit softness persists, with one-time charges still showing up even in otherwise steady quarters (e.g., Black Box). Telecom remains the clear laggard, whose revenue growth is not translating into profits at all. Finally, Utilities has a low topline but strong profit conversion via efficiency and regulatory tailwinds, as seen in Torrent Power.

Put together, the season PAT is being shaped as much by accounting/exceptionals as by demand. The most investable signal is often hiding in the spread between revenue, EBITDA, and reported profit: who’s converting growth cleanly, who’s buying growth via costs, and who’s merely reporting noise. As we approach the end of this season, the remainder of the results will highlight whether margin resilience remains the dominant driver or whether demand finally starts doing the heavy lifting.

Company Spotlights

• Hindalco Industries Ltd. (Commodities): Sales climbed 14%, and EBITDA inched up 5%, but profit slumped 45% after a large exceptional hit tied to Novelis’ Oswego fire disruptions. The damage looks more like a one-off US execution than weak Indian aluminium/copper demand.

• Grasim Industries Ltd. (Commodities): Record revenue rose 27%, and profit grew 21% as cement volumes and VSF exports held up, while Birla Opus scaled and financial-services AUM expanded. EBITDA climbed 33% despite a labour-code charge; the portfolio’s mix seems to be supporting momentum.

• Mahindra & Mahindra Ltd. (Consumer Discretionary): SUVs and tractors both posted ~23% volume growth, pushing revenue up 26% and PAT up 39%. The margin hold at ~14.7% (despite the labour-code hit) hints that mix and scale are helping. Momentum seems to be coming from stronger SUV traction and a firmer rural backdrop; the next tell will be whether pricing and input costs stay supportive as volumes normalise.

• Titan Company Ltd. (Consumer Discretionary): A big festive quarter: revenue up 43% and profit up 61%, led by jewellery’s 42% growth across Tanishq/Mia/Zoya and CaratLane. Margin expansion suggests operating leverage; the shift toward organised, premium jewellery may be helping despite high gold prices.

• Oil And Natural Gas Corporation Ltd. (Energy): Topline was basically flat, but profit rose 22% even with crude realizations down ~15% and production steady. That resilience seems tied to tighter costs, steadier gas pricing, and help from subsidiaries/JVs.

• Coal India Ltd. (Energy): Revenue slipped 2% and profit fell 16% as offtake and output softened and realizations eased; pay-revision provisions pushed employee costs up, crimping EBITDA. The pattern may hint at weaker demand and a tougher cost base.

• State Bank of India (Financial Services): Profit rose 14% on modest income growth, helped by stronger NII, better asset quality, and lower credit costs. The quarter was also boosted by non-recurring items like YES Bank stake-sale income and forex profits.

• Muthoot Finance Ltd. (Financial Services): Profit more than doubled as gold-loan AUM expanded ~50% and NII jumped 64%, lifting revenue 58% YoY. Momentum may have been boosted by higher gold prices and festive demand, with easing funding costs adding a tailwind.

• Hindustan Unilever Ltd. (FMCG): The headline print (profit surging 121%) is doing a lot of heavy lifting via the ice-cream demerger gain, so it’s worth separating the two stories. The operating business looks much more muted: low-single-digit revenue growth with steady volumes, but profitability appears under pressure as margins compressed and brand investments rose. The next few quarters hinge on how quickly pricing actions and cost inflation settle, and whether volume growth can stay resilient without leaning on promotions, because without the exceptional item, earnings momentum seems far less dramatic.

• Lupin Ltd. (Healthcare): A standout quarter as revenue jumped 24%, and profit rose 38%, with the US business surging 54% and margins expanding sharply (EBITDA margin ~33.5%, up 840 bps). This looks like a launch-led US run plus a healthier mix and execution.

That’s it for this edition. We still have some key companies in the remaining weeks before the season comes to an end! See you in the next one.

• New series of CPI is here and it does not change the big picture of CPI trajectory

• Wireless telecom subscribers spiked sharply in last two months due to Airtel

• Life insurance sector is seeing strong growth driven by LIC

• General insurance sector is also seeing strong growth

The long-overdue shift in the CPI base is over. On Thursday, we got the new CPI series. Inflation, as per the new series, continues to be low at below 3% in January. The big picture remains that inflation is inching up, as expected, but still remains comfortable. And so, it will not immediately change monetary policy or interest rates.

One of the key changes in the new series is the lower weight for food relative to the earlier series. Given that food is the most volatile component of the CPI, this lower weight will make the CPI series less volatile. There are, of course, several under-the-hood changes in terms of a more representative basket of commodities, a larger number of commodities, more markets from which price data is collected, and so on, which should improve its credibility.

The wireless subscriber base in India increased significantly in the last two months. November and December saw a cumulative increase of over 70 million subscribers. This is an over 6% increase in just two months. But turns out this increase was due to a technicality.

Almost the entire increase is due to Airtel, which hitherto was not reporting its M2M subscriber base (sim count) in its monthly filings. Other operators were already including their M2M sims in their subscriber base. Airtel corrected this anomaly in its December filing, due to which its subscriber base increased by almost 70 million or by 18%. Airtel did not split out how much of its subscriber base increase is due to M2M and how much organic increase, but in the 6 months before this, Airtel’s monthly subscriber growth was just over 600 thousand or ~1.2 million in two months. Not a large number.

So what are M2M sim cards? They are machine-to-machine SIM cards. SIM cards that are embedded into IoT devices, such as in modern cars, which offer internet connectivity. Or in the smart metering systems that the power distribution companies are putting in place. What is absolutely fascinating, though, is the sheer scale of this! If for Airtel, a sixth of its subscriber base is just M2M sim cards or non-human sim cards, it is fair to assume that other wireless operators have a similar number. If we just include Airtel and Jio, this implies that there are over 150 million M2M ‘active’ sim cards in the country currently. And if we include all the operators, this number rises to over 20 million. That is a very large number of sim cards embedded directly into machines.

The last few months have been good for the life insurance sector. New Business Premiums have grown by almost 30% YoY over the past 3 months, the highest growth in the last few quarters. The growth is being driven by single-premium group policies, which have seen over 40% growth. And because LIC has a much higher share of business here, it is LIC which is driving this.

But even the traditional individual non-single premium segment has seen growth tick up to almost 20% YoY over the past three months after remaining in single digits through most of 2025. And the growth is driven by higher policies – the number of individual non-single premium policies sold has grown by 28% over the past 3 months. So, things are looking good!

The general insurance sector is also seeing a pick-up in growth. Over the past three months, the total business of the general insurance companies has grown by 17% YoY, the strongest growth in over 2 years.

Among the larger companies, Bajaj, HDFC, Kotak, and SBI have seen a sharp pick up in growth. The erstwhile public sector general insurance companies continue to lose market share. Their market share has fallen from close to 50% in mid-2017 to less than 30% currently.

That’s it for this week. See you next week…

As of yesterday, revenue growth is running at ~8% YoY, down from over 9% as of the last week. Growth in operating profits (EBITDA) has however ticked up to almost 11% YoY, as against less than 10% as of last week. Excluding financial services, operating profit growth is slightly faster but revenue growth is even weaker. This continues to point towards margin management than demand acceleration as the key driver of corporate performance.

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends, highlighting what’s propelling growth this week.

• The second dives into standout company results shaping those numbers.

Want to dig deeper? Download the extended edition for full sector-wise company data and detailed performance notes

This Week In Earnings Q3 Fy26 03

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Aggregate Trends

The results so far reinforce the familiar theme of healthy topline growth with sharply uneven profit outcomes by sector.

Beneath these steady headline numbers, however, sector divergence has widened. Energy is now the clearest outperformer, with EBITDA and profit growth far outpacing revenue, supported by improved refining economics and stable fuel demand. Industrials continues to deliver one of the cleanest growth profiles this quarter, with strong topline expansion translating into healthy operating and profit growth.

The Commodity complex tells a more nuanced story. While profits have surged, aided by cost actions, domestic mix benefits, and occasional one-offs, revenue growth remains modest. In contrast, Consumer Discretionary has weakened sharply, with margins and profits coming under pressure despite positive revenue growth, reflecting disruption-driven volatility and fixed-cost absorption challenges.

Several large sectors continue to show a disconnect between operating performance and bottom-line outcomes. FMCG remains steady, with double-digit growth across revenue and EBITDA, but profits are largely tracking rather than accelerating. Healthcare has seen margin pressure cap profit growth despite strong topline expansion. Information Technology and Services both report operating growth, yet profits have slipped, highlighting the growing influence of provisioning, finance costs, depreciation, and exceptional items.

Telecommunications remains the anomaly. Revenues and EBITDA continue to grow strongly on ARPU gains and network scale-up, but profits have fallen sharply as depreciation and statutory costs from heavy investment cycles weigh on reported earnings.

Overall, Q3 FY26 is shaping up as a quarter of stable demand but increasingly uneven profitability, where cost structures and capital intensity are separating reported winners from underlying momentum. As more results flow in, the gap between operating strength and headline profit outcomes gets harder to ignore.

Company Spotlights

• Tata Steel Ltd. (Commodities): Revenue rose 6%, while profit surged on stronger India deliveries, wider EBITDA margins, and transformation-led cost savings, with a tax-related one-off also helping the headline. The jump seems rooted in domestic mix and volume resilience despite softer overseas conditions.

• Steel Authority of India Ltd. (Commodities): Revenue rose nearly 12% on higher sales volumes, while profit rebounded sharply as cost controls and lower finance charges took effect. The improvement seems linked to operating leverage and inventory clean-up, even as margins remain sensitive to steel-cycle swings.

• Adani Enterprises Ltd. (Commodities): Revenue grew in high single digits, while profit spiked mainly because of a large one-time gain from asset/stake sales. Underlying operations appear steadier, with airports and new-energy businesses contributing to EBITDA growth.

• Tata Motors Passenger Vehicles Ltd. (Consumer Discretionary): Revenue fell sharply and the quarter swung to a loss, largely reflecting JLR production disruption from the cyber incident and sizeable exceptional charges. The extent of the decline appears amplified by weaker realisations and fixed-cost absorption, even as domestic PV volumes held up better.

• Indian Oil Corporation Ltd. (Energy): Revenue rose about 8%, while profit rebounded sharply as refining margins improved materially and throughput stayed strong, with LPG compensation also supporting the quarter. The scale of the swing seems tied to more favourable refining economics alongside resilient domestic fuel demand.

• GAIL (India) Ltd. (Energy): Revenue slipped mid-single digits, while profit dropped sharply from a high base as gas marketing margins and petrochemicals weighed on the quarter. The result appears influenced by spread volatility and higher depreciation, even as transmission earnings stayed comparatively steady.

• Bajaj Finserv Ltd. (Financial Services): Revenue grew about 24%, but profit was broadly flat as higher credit provisions and one-time labour-code costs offset strong underlying momentum. The outcome seems consistent with a quarter focused on strengthening buffers, even as lending and insurance engines continued to expand.

• Power Finance Corporation Ltd. (Financial Services): Revenue rose in high single-digits, and profit grew in mid-single digits, supported by steady loan book expansion and stable asset quality. The trajectory appears aligned with continued power-sector funding needs. especially renewables, though competitive lending could keep spreads from widening materially.

• Bajaj Finance Ltd. (Financial Services): Revenue grew nearly 18%, but profit fell mid-single digits as accelerated credit provisioning and a labour-code charge weighed on the reported figure. The underlying picture looks stronger, with AUM and loan growth continuing to support core earnings momentum.

• Bharti Airtel Ltd. (Telecommunications): Revenue rose nearly 20%, and EBITDA expanded, led by stronger India and Africa operations and continued ARPU improvement. Profit fell sharply, reflecting higher depreciation and statutory costs from network rollout; the investment cycle appears to be weighing on reported earnings.

That’s it for this edition. We’re only halfway yet, and a lot to look forward to, which we’ll be unpacking in the coming weeks! See you next week.

• Union Budget continues the path of, slow, fiscal consolidation

• Lower receipts drive lower capex, for both center and states

• RBI keeps interest rates unchanged

• December sees 4% decline in Airline passenger traffic driven by 11% decline for Indigo

• Power generation grows 5% in January on provisional basis

• White collar hiring sees sharp slowdown as evidenced by Naukri JobSpeak Index

First, the budget. And at a high level, it did what budgets are generally meant to do – a simple statement of accounts. And the statement of accounts presented a reasonably good picture – the fiscal deficit is expected to decline 40bps this year to 4.4% of GDP, and as per the budget estimates, it will decline by a further 10bps next year. That said it is worth noting that despite the Covid19 pandemic having long ended, the fiscal deficit continues to remain well above the pre-pandemic levels.

The interesting question, though, is how this fiscal consolidation is being achieved. In the current year (FY26), as per the revised estimates, revenues will miss budget estimates. But this has been more than offset by lower expenditure.

Total receipts for FY26 as per the revised estimates are likely to be lower than the budget estimate by ~₹900bn. In contrast, total expenditure is likely to be lower by ₹1000bn. And this entire shortfall (and some more) is due to lower grants (to states) for capital expenditure. The government had budgeted grants of ₹4,272bn as grants for capital expenditure in the budget last year. The revised estimate is almost 30% lower at ₹3,081bn. This will not have an impact on the Centre’s capital expenditure, which in any case, is independently expected to grow by less than 5% in FY26 as per the revised. But this will weigh on the state government’s capital expenditure. And the first few state budgets that have come in reflect this.

So the answer to the question of why investments in the economy don’t seem to be growing lies partly here. Of course, the budget estimates suggest that next year things will change. Capital expenditure is expected to be in double digits, and the Grants for capital expenditure will also see a sharp increase. But like this year, this will almost entirely depend on whether revenue estimates fructify. They did not this year. But some of that was due to the GST rate cuts which happened post the last year’s budget. So, unless some such external event occurs, government capex should recover next year.

Following the budget, the RBI’s Monetary Policy Committee (MPC) decided to keep its interest rates unchanged this week. So, the Repo rate remains unchanged at 5.25% while the SDF and the MSF rates remain unchanged at 5% and 5.5% respectively.

What has driven this is growing confidence in the trajectory of economic growth. The MPC raised its forecast for near-term growth by ~20bps. While inflation remains low, it is expected to pick up and rise to 4% next quarter. And the MPC notes that the external sector headwinds have increased even though the overhang of high tariffs on US exports has gone away. Accordingly, the MPC reckoned that a rate cut was not warranted.

The domestic aviation data for December was released this week. And it was a weak month, as expected, given the scheduling issues faced by the airlines, notably Indigo. Overall passenger traffic declined by 4% YoY, the sharpest decline in recent months. Indigo saw passenger traffic decline 11% YoY, again the first decline in recent months.

The other carriers benefited from this decline. Air India group saw high single-digit growth in passenger traffic while SpiceJet saw domestic passenger traffic grow for the third consecutive month. Smaller airlines saw an even sharper increase in passenger traffic – Star, for example, saw over 70% growth in passenger traffic, although admittedly this is on a low base.

Power generation grew 5% YoY in January as per provisional data. This is broadly the same growth as in December and was at the upper end of the range of the past few quarters. Renewables continue to drive this growth, with power generation from renewable sources growing over 20% in January. In contrast, power generation from conventional sources grew by a modest 2%.

Lastly, White-collar hiring moderated in January, with the Naukri JobSpeak Index growing by a modest 3% YoY after a double-digit growth in the previous month.

Hiring intentions declined sharply in telecom, financial services, and electronics, contracting by 21%, 15%, and 12%, respectively. Meanwhile, IT/software and IT hardware services reported marginal declines of 2% and 4%, respectively. In contrast, accounting, taxation & finance, advertising, and architecture remained resilient, though momentum eased from the previous month.

That’s it for this week. See you next week…

Revenues are up 9.2% year-on-year so far while EBITDA is up 9.7%, and PAT has grown by 10.6%. That said, growth metrics have decelerated compared to the past week. Excluding financial services, the picture looks a touch firmer across the board, with revenues up 10.1%, EBITDA up 10.9%, and profits up 11.5%, suggesting broader operating momentum outside the financial sector is still holding up well.

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends, highlighting what’s propelling growth this week.

• The second dives into standout company results shaping those numbers.

Want to dig deeper? Download the extended edition for full sector-wise company data and detailed performance notes.

This Week In Earnings Q3 FY26 02

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Aggregate Trends

The results so far reinforce the familiar theme of healthy topline growth with sharply uneven profit outcomes by sector.

Consumer Discretionary remains the clearest outperformer, with revenue up 23.8% translating into 32.8% profit growth, highlighting strong demand conditions and operating leverage. Energy is another standout, where EBITDA growth (17.7%) and PAT growth (25.1%) are comfortably ahead of revenue growth (8.7%), pointing to strong margin support.

Industrials also looks robust, with broad-based strength across the P&L, and revenue up 15.4%, EBITDA up 23.9%, and profits up 16.8%, suggesting operating momentum remains strong even as cost intensity varies within the sector. The middle is more mixed. FMCG is steady, with double-digit growth across revenue and EBITDA (11.2% and 13.1%), while profit growth (10.5%) is holding up but not yet running far ahead.

Utilities is stable but subdued, with EBITDA up 10.8% but profits up just 1.7%, indicating weaker bottom-line conversion despite operating improvement. Financial Services continues its steady run, with profit growth (9.3%) broadly tracking revenue (7.2%).

Several sectors remain under pressure. Healthcare has seen margin compression, with EBITDA down 6.1% and profits down 18% despite revenue growth of 7.4%. Information Technology has slipped into a profit decline (-7.7%) despite modest operating growth. Services is the sharpest laggard on the bottom line, with profits down 35.8% even as EBITDA is up 9.3%, highlighting how costs, finance lines, or exceptional items are increasingly shaping outcomes.

Telecom is the anomaly sector, as its revenues (-8.2%) and EBITDA (-5.4%) remain weak, yet profits are up 19%, suggesting the profit picture is being driven by factors below operating performance rather than a pure demand-led recovery.

Overall, Q3 FY26 continues to look like a quarter of stable demand but uneven profitability, where cost structures and margin discipline are doing more to separate winners from laggards than topline growth alone. As more results come in, the sector divergence, especially between operating performance and bottom-line conversion, should become clearer.

Company Spotlights

• UltraTech Cement Ltd. (Commodities): Revenue jumped 27% YoY to ₹218,297 mn and profit rose 17.4% to ₹17,294 mn, driven by record volumes and EBITDA growth despite a labour-code provision. It may indicate scale-led operating leverage and early synergies from integration, helping cushion a still-competitive pricing backdrop.

• Vedanta Ltd. (Commodities): Revenue dropped 40.3% YoY to ₹233,690 mn, yet profit rose 60.1% to ₹78,070 mn, aided by strong EBITDA and record alumina/aluminium and zinc-silver output. It likely reflects richer realizations and forex tailwinds offsetting weaker oil & gas.

• Maruti Suzuki India Ltd. (Consumer Discretionary): Revenue surged 28.7% YoY to ₹499,041 mn on record volumes, but profit rose only 4.1% to ₹38,791 mn as higher costs and a one-time labour-code provision squeezed margins. It hints that growth is coming through units, while profitability is being capped by pricing and mix.

• Prestige Estates Projects Ltd. (Consumer Discretionary): Revenue more than doubled to ₹38,726 mn (+134% YoY) and profit surged to ₹2,447 mn (+660% YoY), helped by faster project handovers plus strong pre-sales and collections. The spike could also reflect lumpy revenue recognition after timely completions and launches.

• TVS Motor Company Ltd. (Consumer Discretionary): Revenue jumped 32.5% YoY to ₹147,555 mn and profit rose 46.3% to ₹8,913 mn, powered by record volumes, a sharp EV ramp, and strong exports. The margin lift suggests mix and operating leverage improved, not just unit growth.

• Chennai Petroleum Corporation Ltd. (Energy): Revenue rose 23.9% YoY to ₹194,384 mn, while profit jumped to ₹10,016 mn from a low base as GRMs improved sharply and throughput ran above nameplate capacity. This quarter seems driven more by margin cycle and product cracks than by pure volume growth.

• Swiggy Ltd. (Consumer Discretionary): Revenue surged 54% YoY to ₹61,480 mn, led by Instamart’s rapid scale-up alongside steady food delivery growth. Loss widened to ₹10,650 mn as spending rose on dark stores and fleet expansion, likely the near-term cost of pushing quick commerce harder.

• Nestle India Ltd. (FMCG): Revenue climbed 18.6% YoY to ₹56,670 mn and profit jumped 45.1% to ₹9,984 mn, helped by volume-led growth, strong confectionery/beverages, operating leverage, and a lower tax rate. This may point to steady brand pricing power and mix improvement.

• Larsen & Toubro Ltd. (Industrials): Topline stayed healthy. Revenue rose 10.5% YoY to ₹714,497 mn, and EBITDA improved, but profit dipped 3.8% to ₹38,247 mn due to a one-time labour-code provision. Strip that out, and the quarter seems more robust, backed by strong order inflows.

• Vodafone Idea Ltd. (Telecommunications): Revenue nudged up 1.9% YoY to ₹113,230 mn, supported by ARPU at ₹186 and higher data use. Loss narrowed to ₹52,860 mn as EBITDA improved and finance costs softened; the interest-and-spectrum burden still seems to dominate the bottom line.

That’s it for this edition. A lot is yet to come, which we’ll be unpacking in the coming weeks; stay tuned!

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends, highlighting what’s propelling growth this week.

• The second dives into standout company results shaping those numbers.

Want to dig deeper? Download the extended edition for full sector-wise company data and detailed performance notes

This Week In Earnings Q3 Fy26

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Aggregate Trends

The results so far point to a widening divergence across sectors. Consumer Discretionary is a clear outperformer, with strong revenue growth translating into sharp profit expansion, reflecting favourable demand conditions and operating leverage. FMCG has also delivered a positive surprise, with profits growing faster than revenues, indicating meaningful margin recovery.

Commodities continued to post outsized profit growth, supported by strong EBITDA expansion, underscoring the impact of cost discipline and operating leverage even as pricing tailwinds soften. Energy remained stable, with profit growth comfortably outpacing topline growth.

The picture is mixed in other sectors. Industrials and Utilities reported strong revenue and EBITDA growth, but profits have lagged, pointing to cost pressures and ongoing investment weighing on bottom-line conversion. Financial Services continues to show steady but unspectacular performance, with profit growth broadly tracking revenues.

Several sectors remain under pressure. Healthcare has seen a sharp contraction in margins and profits so far this quarter. Information Technology and Services have slipped into profit declines despite modest revenue growth, while Telecom remains the clear laggard so far, with revenues, margins, and profits all sharply lower.

Overall, Q3 FY26 is shaping up as a quarter of stable demand but uneven profitability. Margin discipline and cost structures are increasingly determining outcomes, even where topline growth remains healthy. As more results come in, the contours of this divergence should become clearer.

Key Company Highlights

• Eternal Ltd. (Consumer Discretionary): Numbers were exceptionally strong as revenue tripled and profit rose 73%, powered by Blinkit’s rapid scale-up and strong Hyperpure growth. Profitability also improved at the EBITDA level, showing the quick-commerce expansion is getting more efficient.

• JSW Energy Ltd. (Utilities): Quarter was driven by scale. Revenue jumped 67% and profit more than tripled as generation rose sharply across thermal and renewables. New capacity and acquired assets are showing up in the numbers, with margins expanding alongside volumes.

• Waaree Energies Ltd. (Industrials): A headline quarter with revenue and profit more than doubling as module output and sales ramped sharply. A large order book supported high utilisation, while strong margins showed the scale-up is feeding through to profitability.

• JSW Steel Ltd. (Commodities): Profit spike is flattered by a large one-off deferred tax credit tied to the Bhushan Power & Steel stake sale. Beneath that, volumes were strong, and EBITDA improved, showing operations did their part, too.

• Mangalore Refinery & Petrochemicals (Energy): Turned in a standout quarter, with refining margins and high utilisation driving a sharp profit rebound. Inventory gains and lower debt amplified operating strength, making the refining cycle work decisively in its favour.

• Bharat Petroleum Corpn. Ltd.: Had a standout quarter, with profit nearly doubling as refining margins widened sharply and throughput improved. Strong domestic fuel demand and better product spreads more than offset the still-steady, competitive marketing environment.

• Nuvoco Vistas Corporation Ltd. (Commodities): Had a clean turnaround quarter, with higher volumes and tighter cost control pushing it back into profit. Premiumisation and lower fuel costs amplified operating leverage as cement demand firmed toward the end of the quarter.

• Hindustan Zinc Ltd.: Had a very strong quarter as revenue rose 28% and profit climbed 46% as mined metal output hit records and costs stayed exceptionally low. Silver volumes also helped, keeping margins very high even as commodity prices added to profitability.

• Radico Khaitan Ltd. (FMCG): Had a strong festive-quarter showing: revenue jumped 22% and profit rose 62% as premium spirits volumes grew faster than the base business. A richer mix and steadier input costs helped margins widen meaningfully.

• CreditAccess Grameen Ltd. (Financial Services): Swung back to profit as credit costs more than halved, signalling that last year’s microfinance stress is easing. Disbursements picked up, AUM grew steadily, and early delinquency trends (PAR) improved. making this feel like a clean, provisioning-led recovery.

That’s it for this edition. A lot is yet to come, which we’ll be unpacking in the coming weeks; stay tuned!

• Rupee continues to depreciate against the USD, but it has depreciated much more against other currencies

• Rupee depreciates even as the US Dollar itself is depreciating against most currencies

• Long bond yields have risen both in India and the USA

• RBI continues to intervene heavily to defend the rupee but gold price change is masking the fall in reserves

• Net FDI received by India has been negative for the third consecutive month

In case you missed, we now fairly comprehensively track the debt market in terms of issuances, trading activity, rating changes, yields and spreads, right down to entity and ISIN level. There are additional analytics based on this that we publish such as estimating bond/cp/cd redemptions, daily issuance etc. See a quick demo from here

We start with the Rupee, which is now headed towards 92 against the USD. And while the focus remains on the rupee’s exchange rate against the US Dollar, the real story is the rupee’s exchange rate against the other major currencies. While the rupee has depreciated ~7% against the US Dollar over the past year, it has depreciated substantially more against the other major currencies. This is because the US Dollar itself has fallen sharply against most other currencies.

Thus, against the Euro, for instance, the rupee has depreciated by almost 20% over the past year and against the British Pound, the rupee has depreciated by over 15%. Even against the Chinese Renminbi, the rupee has depreciated almost 13% over the past year.

The rupee has been an outlier against other emerging market currencies, also. Over the past year, for instance, the Brazilian Real and the Mexican Peso have appreciated by over 10% against the USD. Even the South African Rand has appreciated in double digits against the USD, while the Malaysian Ringgit has appreciated 10% against the USD over the past year.

Apart from the Rupee, the Indonesian Rupiah has been the worst-performing Asian currency, and it has fallen by just 3% against the USD. Effectively, in the global USD depreciation trade, the INR (and a couple of other currencies) have massively underperformed by depreciating against the USD. And this is odd.

The RBI continues to intervene in the forex market to support the rupee. In November, it sold ~US$10bn of reserves, and between April and November, the RBI has cumulatively sold US$43bn of reserves to defend the rupee. This is, however, not manifesting itself in a decline in the FX reserves as the gains in the value of Gold due to rising prices have almost fully offset the fall in foreign currency assets.

Not surprisingly, this sharp currency depreciation is pushing up bond yields in both India and the USA. The 10-year bond yield in the USA is now ~4.25%, the highest in the last few months. It has now increased by 25bps since October and is the highest since late August. And this is despite the 75bps rate cut from the Federal Reserve during this period. The US yield curve (10yr – 3mth), which was basically flat till September, has now steepened and is over 50bps wide.

Similarly, in India, the 10-year yield is now above 6.7%, up 25bps since late October and is now the highest in almost a year. Indeed, even short-term rates have increased in the last few weeks. The yield on the 3-month GSec has increased by almost 25bps since the start of the year and is now over 5.4%, the highest since June 2025. And this is despite the 125bps of policy rate cut in 2025.

Not surprisingly, the RBI is boosting liquidity to reduce the stress in the money markets. With the Union Budget around the corner, one suspects the bond market will settle down only post the budget, once the deficit and borrowing numbers for FY27 are available.

Lastly, one of the drags on the currency and by implication the interest rates is that while the trade deficit is contained, there is a lack of capital flows. And one of the factors here is the absence of FDI. Net FDI received by India (adjusted for repatriation as well as outward FDI by Indian corporates) was negative (meaning more money went out than came in) for the third consecutive month in November as per the provisional data from RBI released this week. Over these 3 months, India saw an outflow of FDI of almost US$4bn, taking the YTD cumulative net FDI inflow to a modest US$6bn.

For reference, India’s trade deficit (goods + services) has totaled just under US$100bn between April and December of FY26. This extremely low level of FDI relative to the trade deficit increases the vulnerability to swings in portfolio flows. And this is exactly what we are seeing currently.

That’s it for this week. It will be the budget next week(end!). So, we shall see if there is anything in the budget to change any of this. The flipside of the rupee depreciation and RBI’s FX intervention will be significantly higher realised FX gains for the RBI, which it can pay as a dividend to the Central government. Will the government use it to cut some taxes or boost spending? And will any of that turn around the sentiment? We shall find out soon! So long...

• India’s trade deficit widens over 20% YoY in December as export growth decelerates

• Exports to USA still holding up with just 2% decline in December

• Aggregate cash holdings of equity funds has gradually declined with Small cap funds seeing amongst the largest decline

• Domestic coal production sees a pick up with dispatches to non-power sectors seeing strong growth

• China’s exports continue to grow despite decline in exports to the USA

• US Inflation remains sticky complicating the task for the Fed

In case you missed, we introduced Trade DB, a separate section to track detailed trade data right down to individual 8-digit HS Code level. You can filter this by imports and exports as well as by value and quantity. In addition, you can now track detailed trade data across over 175 categories and subcategories for all key India’s trade partners (over 65 of them!). For more click here

India’s merchandise trade deficit declined 21% YoY in December to US$25bn as export growth decelerated sharply to just 2% YoY, the lowest in the last 5 months. Europe was the big drag on exports in December – the UK, Netherlands, France all saw sharp decline in exports. Exports to Singapore and Saudi Arabia also declined sharply. However, despite the tariffs, exports to the USA dropped by just 2% YoY. This decline was, however, more than offset by continued strong growth in exports to China (+67%), Hong Kong (+61%) and the UAE (+15%).

What is worth noting is that despite the tariffs kicking in from August, exports to the USA have grown by almost 10% YoY between April and December due to the front-loading of exports in anticipation of the tariffs in the first half of the year. And given the current run rate, exports to China will likely cross US$20bn for the full year FY26, making China the third largest export destination for India after the USA and the UAE, overtaking the UK and the Netherlands!

Aggregate cash holdings of domestic equity mutual funds has steadily dropped through the second half of 2025 from a high of 7% in April 2025 to ~5.5% of AUM towards the end of the year. At this level, cash holdings are the lowest since the first half of 2024, when they were around 5% of AUM.

The decline, though, is not across all fund categories. Both Large and small-cap funds have seen sharp declines in cash levels. Large-cap funds held ~3.9% of their AUM in cash, down 2ppt from April 2025 when cash holdings had totalled ~6% of AUM. Cash holdings in large-cap funds is the lowest since June 2024. And for the small-cap funds, the decline is even sharper - from almost 9% of AUM in April 2025 to just under 6% as of December. And at below 6% cash levels at small-cap funds is the second lowest in the last 2 years, the lowest being in June 2024 at 5.6%.

If the level of cash holdings reflects the optimism or otherwise of equity fund managers, then this decline in their cash holdings does suggest that fund managers, on balance, have become more optimistic about the equity market performance over the next few months. We shall see!

Domestic coal production grew 3.6% YoY in December, the strongest growth in the last 7 months. However, dispatches to end users declined 2.7% YoY. This was largely due to the decline in dispatches to power plants – thermal power plants saw their 4th consecutive month of decline in coal dispatches, with December seeing a 9% decline.

This, though, was offset partially by a sharp growth in dispatches to the Steel and Cement sectors. Dispatches to Steel mills, for instance, almost doubled on a YoY basis in December and has grown at an average of 30% over the past 3 months while those to Cement plants have increased by over 10% YoY in the last 3 months. Captive power plants have also seen double digit growth in coal dispatches over the past 3 months. Is this a marker for strong industrial growth in the ensuing months?

China recorded a monthly (goods) trade surplus of US$114bn in December 2025, the highest in the past six months, as exports rose faster than imports. Exports rose by almost 7% YoY in aggregate despite a 30% decline in exports to the USA.

China’s exports to the USA have now declined for 9 consecutive months. However, higher exports to the EU and the Southeast Asian countries offset the drag from the lower exports to the USA. China’s total imports, rose by 6% YoY in December despite a similar ~30% decline in imports from the USA.

Lastly, CPI Inflation in the USA increased by 2.7% YoY in December, which was broadly the same rate as in November. Food prices continue to be the key driver of inflation, rising to over 3% YoY in December. What is noteworthy though is that US CPI Inflation has remained above the Fed’s target of 2% in every single month since February 2021 – so almost 5 consecutive years!

As we noted last week, the US job market has seen a marked slowdown with the economy shedding jobs in the last quarter of 2025 – the first time since Covid19. Higher inflation, even as the labour market is softening, complicates the US Fed’s job as it juggles its two objectives – price stability and full employment. Not surprisingly, then, the odds of further rate cuts from the Fed have diminished. The Fed Fund Futures are now pointing to no rate cut from the Fed till April – a month ago, they were pointing towards 70% odds of at least 1 rate cut (and 25% odds of 2 rate cuts) vs current 66% odds of no rate cut.

That’s it for this week. See you next week…

• India’s GDP Growth is expected to accelerate to 7.4% in FY26

• Nominal GDP growth will however slow to multi-year low

• Why GDP growth does not matter!

• Domestic Equity funds continue to see strong inflows but folio additions has slowed down dramatically

• Debt funds have seen recovery in folios but have been overtaken by Gold funds

• US Trade deficit falls to multi year lows in October as Imports shrink

• US labour market has softened considerably in last few months

According to the First Advance Estimate (FAE), annual real GDP is projected to grow by 7.4% in FY26, up from 6.4% in FY25, and is expected to surpass ₹200 trillion in FY26, compared to a provisional estimate of ₹187 trillion in FY25. Notably, nominal GDP for FY26 is estimated to grow at just 8% YoY, the slowest growth in the last few years, implying an economy-wide inflation or the GDP deflator of less than 1%.

Real GVA is expected to grow by 7.3% YoY in FY26, higher than the 6.4% growth in FY25, so there is not much divergence between GDP and GVA growth. And internally, the growth drivers are expected to be fairly strong: the Services sector growth is expected to rise 190bps to 9.1% in FY26, while the Manufacturing sector is likely to see growth accelerate by 250bps to 7%. This will be offset by a moderation in the Agriculture sector to 3.1% (still reasonably strong) from 4.6% and in sectors like Construction and Electricity. And capex is expected to remain strong. The share of Gross Fixed Capital Formation in GDP is expected to rise further to a multi-year high of almost 34%. So much for the constant complaining about the lack of investments in the economy.

The big picture though is that the first advance estimate of GDP for FY26 is largely an irrelevant number. This is because by the time it is time for the second advance estimate of GDP to be published, at the end of February, we would migrate to the new GDP series with 2022-23 as the base year. And as is generally the case, when there is a shift of base year, there is likely to be a significant change in both the actual GDP number and its recent growth trajectory. So it is best to completely ignore this growth number and wait for the new series to start flowing in, and interpret the data and its implications.

Inflows into domestic equity funds continue to remain strong. December saw net inflows of ₹280bn, broadly the same pace as in the previous 3 months. That said, the breadth of inflows has narrowed quite significantly. The number of net new folios fell to below 1 million in December 2025, the lowest number since May 2023 and down more than 80% from the peak of almost 5.5 million net folios being added in July 2024.

Even as Equity funds have seen a massive slowdown in folio addition, debt funds have seen a pickup. In 2025, for instance, all debt funds saw the number of folios increase by over 1 million, after a cumulative decline of almost 0.8 million in the preceding 3 years. Most of this increase has happened in liquid funds, while the longer-duration funds have seen a decline.

Gold ETFs, though, have seen the strongest growth in folios in recent months. In the last 2 years, the number of folios in Gold ETFs has more than doubled, and as a category, they have more folios than all debt funds put together!

The U.S. goods trade deficit narrowed sharply in October, falling $18.6bn month-on-month to $58.6bn, and to its lowest level since 2019! This happened as imports dropped to their lowest level since June 2023, declining 5.5% YoY in October. Specifically, the consumer goods imports declined to their lowest since June 2020.

And on the other hand, exports rose to an all-time high, driven by record high exports to countries such as the UK, Switzerland and India. This data, though, pertains to October, so it is a bit dated (and running behind the normal publication schedule due to the still lingering impact of the recent Government shutdown).

Even as the trade data remains strong, the labour market data has markedly weakened. The US economy added 50,000 non-farm payroll jobs in December, a sharp slowdown compared with the 323,000 jobs added in the same month last year. Job gains for October and November were revised downward by a cumulative 76,000, with October revised to a loss of 173,000 jobs and November revised to a gain of 56,000. Effectively, the US economy has seen job losses in the last quarter of 2025, the first quarter of job losses since the pandemic. This is a significant deterioration in the US labour market. Will this change the Fed’s stance and drive a significant monetary easing in the US? The markets are not yet suggesting an imminent change.

That’s it for this week. See you next week…

• Share of Russia in crude oil imports has started to decline

• Exports to USA rose sharply in November and are broadly flat over the past 3mths

• Exports to China are rising but off a low base

• GST collections declined in December for the second consecutive month

• Wireless subscriber growth has been very strong in 2025 led by Jio and Airtel

• Demand for work under NREGA fell to decadal low in 2025 and work provided also fell to 7 year low

India’s dependence on Russian oil is reducing. In the last 3 months (Sep-Nov), the share of Russia in India’s crude oil imports stood at 32%, down from 37% in the same period last year. Over the past 12 months, 32% of India’s crude oil imports came from Russia (in value terms), down from 36% a year ago. That said, at 32% the number is still significantly above the pre-Russia-Ukraine war. Between 2019 and 2022, for instance, just 2% of India’s crude oil imports came from Russia.

Exports to the USA are also surprisingly holding firm despite the tariffs. After a decline in September and October, exports to the USA grew over 20% YoY in November, such that over the past 3 months, exports to the USA are largely flat on a YoY basis. This is only slightly worse than non-US exports, which grew by 4% during this period. This perhaps partially explains why there has been no seeming urgency on the part of the Government to quickly conclude the trade deal with the USA.

The other notable trend is the sharp surge in exports to China. Over the past 3 months, exports to China have surged over 50% YoY. In absolute terms, exports to China in the last 3 months were the highest in the last 4 years. This growth is, of course, coming off a low base – exports to China had declined 14% YoY. And despite this growth, exports to China this year (FY26) will be below the US$21 bn reached in FY21 and FY22. So this does not yet suggest a structural change in trend.

GST collections declined for the second consecutive month in December. After a 4% decline in November, collections declined by 1% YoY in December. Before the GST rate cuts, which became effective in September, GST collections were growing by 6-7% YoY. Thus, the increase in consumption post the sharp reduction in GST rates has not made up for lower rates – there has been revenue loss on a net basis. This does not mean that the GST rate cuts were a bad policy; it simply means that the Government will have to make up for this revenue shortfall through other sources of revenue or by cutting back on expenditure or simply running a higher deficit.

Wireless telecom operators are having a strong year. Between Jan-Nov 2025, they collectively added over 20 million new subscribers on a net basis, the highest since calendar year 2017, when they had added 40 million subscribers.

Jio continues to see outsized growth in subscribers. So far in 2025 (till November), Jio has added 20 million subscribers while Airtel has added just under 10 million subscribers. Vi continues to lose subscribers – so far in 2025, they have lost 7.5 million subscribers. Surprisingly, BSNL has gained subscribers this year, albeit a modest 1.2 million. This is the first time in the last several years that BSNL has gained subscribers.

Lastly, NREGA has been in focus recently. The government intends to restructure the scheme quite significantly. While there has been a fair bit of debate over the appropriateness of this, what is interesting to note is how the scheme has shrunk in recent months. The number of active workers under the scheme, for instance, has declined to 150 million as of December 2025. At its peak, the scheme had over 200 million active workers.

While the number of person days of work created declined to a 7-year low of ~2500 million. And the number of people who demanded work under NREGA declined to 272 million in 2025, the lowest since 2015!

In theory, this should be good news. For the way this scheme was originally envisaged, almost two decades back, was a pure demand-driven scheme – a counter-cyclical policy that runs on autopilot, kicking in automatically when there is a paucity of jobs (in the rural areas), as people could simply demand 100 days of work at will. So if people are demanding less work under NREGA, it would imply they are finding enough otherwise.

But clearly, the scheme did not work as a purely demand-driven scheme. It was basically a supply-side scheme, and West Bengal is a good case in point. The state has basically seen zero implementation of the scheme for the past two and a half years - for a complex set of reasons that we will not get into. So it is a good thing that the scheme is being restructured lest it go into oblivion given the way it was progressing. The question is whether the scheme in its new avatar changes anything? Time will tell…

That’s it for this week. More next week…

• Another month of low inflation in November

• Bond markets have not celebrated the policy rate cut last week

• Mutual Funds continue to see strong inflows especially in Equity funds

• 2025 on track for second year of over 200+ increase in MF schemes

• Passive schemes now account for a third of total schemes but only sixth of AUM

• Cord cutting continues and number of Pay channels now starts to decline

• Data consumption continues to see strong growth

Another month and another low reading on Inflation. CPI Inflation printed at 0.7% YoY in November, up slightly from the 0.3% YoY print in October but well below the RBI’s target of 4%. In fact, CPI is now running even below the lower bound of the CPI target of 2% set for the RBI’s MPC. This quarter is likely to be the second quarter in a row that CPI inflation will average below 2%.

Extremely benign food inflation continues to be the key driver of lower headline inflation. CPI excluding food and beverages has remained stable, averaging around 4% since April this year. But even here, there are non-core factors. Gold prices, which have risen sharply in the last few months, have been an important upward driver of non-food inflation. Accordingly, the core-core inflation that takes out food, energy, fuel and precious metals has fallen sharply – 2.5% YoY in November, the lowest in recent times.

Bottom line is that there do not seem to be any underlying inflationary pressures. And it is this that drove the RBI to cut rates last week. And as things stand now, if inflation continues to undershoot the projected trajectory (RBI expects inflation to average ~3% during the March quarter), there might be another 25bps rate cut in the February policy meet. We shall see…

The markets, though, seem to be seeing things differently. The 10-year GSec yield has increased by 10bps in the last 10 days. So there has been a selloff in bonds, at the longer end, post the policy, which saw the RBI cut the policy rate by 25bps. At the short end of the curve, too, the yields have seen a modest 5-10bps change as against the policy rate change of 25bps. Effectively, the markets are suggesting they do not see scope for further rate cuts.

November was another strong month for flows into domestic equity funds. Net inflows totalled ₹300bn, higher than the net inflows of ₹250bn in October. Hybrid funds also saw strong inflows of over ₹130bn in November, although the pace has moderated a bit in recent months. And passive funds have also seen strong inflows in the last few months. November saw net inflows of ₹152bn, among the highest monthly inflows in recent years.

In large part, the strong inflows are being driven by new schemes. 2025 is on track to be the second consecutive month of over 200 schemes being launched. 2024 saw the number of schemes across the industry increase by 208, and so far (till November), the number of schemes has increased by 186. At the pace of the last few months, 2025 will also see the number of schemes increase by over 200.

Most of this increase, though, is happening not in active but in passive schemes. In 2024, just over 60% of the increase in schemes was attributable to passive schemes. And so far in 2025, almost 70% of the increase in schemes is attributable to passive schemes. A third of the active schemes are currently passively managed schemes. Most of these schemes, though, are small, and hence the share of passive schemes in total AUM is much lower at 17%.

Lastly, cord-cutting has continued this year. The number of DTH subscribers, as well as subscribers for the large cable operators, continues to decline. And not surprisingly, the number of Pay TV channels is now declining. As of September, this year, there were a total of 334 Pay TV channels in the country, down 28 from last year.

The flipside of this is the increase in media consumption from the OTT platforms. And this is manifesting itself in the continued increase in mobile data consumption. The September quarter saw a total of 69 billion GB of wireless data, up 6% QoQ and 20% YoY. An average wireless data subscriber now consumes almost 25 GB of data per month. This has more than doubled in the last 5 years.

That’s it for this week. See you next week…

• RBI cuts interest rates after pausing the previous two occasions. What has changed?

• How much more can interest rates fall?

• Monetary transmission has broadly kept pace with policy rate changes

• GST collections decline in November as the GST rate rejig takes its toll

• Oil prices are down 10% YoY even in INR terms

So as was expected, though by no means an overwhelming consensus, the RBI’s Monetary Policy Committee did cut the policy repo rate by 25bps last week. This comes after a pause in August and October policy reviews, which had come after a 50bps rate cut in June. The repo rate now stands at 5.25%. The RBI also announced liquidity measures, which should result in more effective transmission of the lower policy rate through to the money markets and into the economy.

What has driven the rate cut is lower inflation. Inflation has continued to surprise on the downside, leading the RBI to reduce its inflation forecast pretty much across the board. For instance, the RBI has reduced its inflation forecast for the June quarter next year from 4.5% in the October policy to 3.9% in this policy. So lower inflation for longer. And at the same time, growth remains reasonably strong. While the RBI does not expect 8% growth in 2Q to sustain, it has increased the growth forecast for say the June quarter next year from 6.4% in the October policy to 6.7% currently.

The natural question to ask is whether rates can go down further. And for that, we need a bit of context. And that is that by historical standards, interest rates are fairly low currently. Outside of the COVID-19 pandemic, the policy rate was last this low in late 2019 and early 2020. And before that, in 2010, when the economy was recovering from the Global Financial Crisis! And the last time we saw sub 5% interest rates was more than two decades ago. And in each of these occasions, economic growth was significantly slower either due to global factors or domestic cyclical factors. While currently there is no such risk to growth. So there is probably not much room for interest to go much lower than the current level. Maybe another 25bps or so. Unless GDP growth sees a material slowdown. It is hard to argue that interest rates should fall significantly from these levels if growth remains resilient around 6-7% as is currently expected.

Actual lending rates have already fallen a fair bit over the past 12 months. The average interest rate on fresh loans given by banks has fallen by ~90bps over the past year from 9.5% to 8.6% currently. This compares to the policy repo rate having fallen by 125bps during this period (of which 25bps happened just last week). So there is possibly another 25-50bps for lending rates to fall further and keep up with the delta in policy rates, but that’s about it.

Interest rates on fixed deposits have also fallen by approximately the same amount. In October, banks paid 5.6% on average on fresh term deposits, down 90bps on a YoY basis. So, like lending rates, deposit rates have another 25-50bps to fall to keep up with the change in policy rates. What this underscores, though, is that monetary transmission, long a bugbear of monetary policy, has been fairly strong in this easing cycle. A number of factors, such as liquidity management from the RBI, a slightly mature debt market and a larger proportion of personal loans being linked to an external market-linked benchmark, have contributed to this.

GST collections declined in November (capturing business activity in October), the first full month for which we have data after the GST cuts came into effect in September. Aggregate GST collections declined 4.4% YoY in November, driven primarily by a 70% decline in GST Cess collections. SGST collections also declined 1% YoY, while CGST collections slowed down to a modest 2% growth. The pace of decline could potentially be slightly in December (business activity of November), as Diwali was entirely in October this year, while last year it was partially in November also. We shall see.

Lastly, one of the factors in India’s favour currently is Oil prices. In November, the Brent Crude Oil prices averaged US$63.6/bbl, down 15% YoY. Thus, even adjusted for the depreciation in the rupee, Crude oil prices are down ~10% in INR terms. And this will have a salutary impact on inflation. And this is also one of the factors keeping the current account balance in check, but for which the rupee would have been under even bigger pressure than it is.

That’s it for this week. See you next week…

• GDP Growth accelerated but because of discrepancies

• Nominal GDP growth remains sluggish

• Domestic steel production and imports are seeing a slowdown

• Rupee is at a decadal low on REER basis

• US retail sales accelerate to multi-month high in September

• US durable goods orders also recover in September

India’s GDP grew by 8.2% YoY during the September quarter, the fastest growth in the preceding 6 quarters. This was well above the market expectation and is obviously good news. That said, our GDP data is not without its issues and so it is only reasonable that while we rejoice at 8% GDP growth, we also dwell over some of the issues with the data. And it is the same bugbear with this quarter’s data - GDP deflator and Statistical discrepancies.

Thus for instance, all the components of GDP – Private consumption, Government consumption, Gross capital formation, Net exports – grew slower than 8%! So what has driven this growth is ‘statistical discrepancies’, which swung from a small negative number to a large positive number. Statistical discrepancies is the factor used to align the GDP estimate as per the expenditure approach and the supply side (or sectoral) approach of estimating economic growth. Excluding discrepancies (admittedly not the right metric, but still) GDP growth for the quarter was just 4%.

The bigger picture is that nominal GDP growth was a modest 8.7% YoY, on top of a modest 8.3% growth in the September quarter last year. So the GDP deflator was close to 0% and this comes because a large part of the deflator estimation is basis the WPI which has no services component. Over the past few quarters, nominal GDP growth has averaged ~9% YoY. Outside of the COVID-19 pandemic, nominal GDP has very rarely grown in the single digits in the last two decades. And in the short run, it is nominal GDP that matters more than real GDP as most of the metrics we care about – corporate revenues and profits – are nominal metrics.

So while the 8.1% real GDP growth number is impressive, in practical terms, it is far less useful. But we are about to say goodbye to this series of GDP, which is well beyond its useful date. The new GDP series with 2022-23 as the base year and expanded data coverage debuts in February, along with the December quarter data. It has taken long for the data to migrate to the new series – the current series with 2011-12 base migrated much quicker from the earlier series with base year 2004-05. But hopefully, the new series has far fewer quirks of data than the outgoing series. So long GDP, hello GDP…

Domestic steel production has seen a slowdown in the last few months, although the growth remains healthy in absolute terms. Crude steel output grew 6% YoY in October, the lowest in the last 5 months, while finished steel rose by 8% YoY, the slowest pace in four months. Pig iron production contracted by 15% YoY, recording its steepest annual decline since March 2023.

Steel imports have also declined – finished steel imports declined for the seventh consecutive month in October, falling over 50% YoY - the sharpest drop since August 2020. Crude steel imports also fell for the second consecutive month in October, contracting 43% YoY, marking the steepest decline in the past seven months. Given the linkage between the Steel and the Construction sector, this makes us wonder - is the construction seeing a slowdown?

The rupee has been falling in recent months against all major currencies. And a consequence of this is that on a REER basis, the rupee is now at its lowest in over a decade. Effectively, the fall in the rupee has been more than what the inflation differentials between India and the other large currencies would warrant. And this means that the rupee has gained an element of competitiveness. In theory, this should boost exports (and offset some of the tariffs) and discourage imports. And this should reduce India’s trade deficit. Will theory translate into practice? We shall see…

Inflation declined modestly in Euro area as per the flash estimate for November. The HICP fell to 2.1% YoY from 2.2% in October. This is broadly the same level the HICP was a year ago. Germany recorded a 2.3% rise in prices in November, slightly higher than the same month last year, while consumer prices increased by 0.9% in France and 1.2% in Italy.

In the United States, the Census Bureau reported a 9.7% year-on-year increase in new orders for durable goods in September, the fastest growth in three months and higher than the 1.7% decline in September 2024. Excluding defence, durable goods orders rose 9.5% year-on-year. Additionally, U.S. retail sales grew 5.7% year-on-year in September, the fastest pace in 32 months, based on non-seasonally-adjusted data. So while the labour market data is softening, the real data is not yet seeing a material softening. Growth remains reasonably robust.

That’s it for this week. See you next week…

• India’s exports decline sharply in October while Imports rise sharply

• Trade deficit rises to a record high

• Rupee is closing in on 90 to the US Dollar and has seen across the board decline

• India’s inflation is now lower than in the USA!

• Inflation has taken off in Japan long used to ZIRP!

• US Unemployment rate is rising and so the Fed is expected to cut rates

India’s exports declined a sharp 12% YoY in October after a few months of high single-digit growth. And surprisingly, this was not due to a decline in exports to the USA. Exports to the USA declined, but by only 9% YoY. Exports to Singapore declined by over 50%, accounting for more than a quarter of the overall decline in exports. Exports to several European countries also saw a sharp decline. Exports to the UK, Italy and the Netherlands, for example, declined over 20% YoY and those to Germany and France declined by ~15%. On the flipside, exports to China saw a sharp 40% increase. And even YTD (Apr-Oct), while overall exports are largely unchanged on a YoY basis, exports to China have grown by almost 25% YoY. China has overtaken the UK and Singapore to become the 4th largest export destination for Indian goods, very close behind the Netherlands.

Imports meanwhile grew 17% YoY in October, the sharpest growth in recent months. This was driven largely by a near tripling of gold imports and more than quintupling of silver imports. Excluding these precious metals, imports declined 2% YoY. So the rise in imports is not broad-based. To some extent, there is also a seasonal angle to both the decline in exports and the increase in precious metal imports as Diwali was earlier this year compared to last year.

That said, the trade deficit widened to a record high of over US$40bn, almost a third higher than the previous record.

And this is also flowing through the rupee, which closed very close to the 90 mark against the US Dollar on Friday. Over the past few months, the INR has seen gradual depreciation against the USD and most other major currencies. The IDH INR Index has fallen ~8% over the past year as the INR has depreciated by 6% against the USD, 8% against the CNY, 10% against the GBP and 16% against the EUR during this period.

And the RBI continues to dip into FX reserves to support the Rupee. And as we have discussed a couple of times before, this intervention is not manifesting itself in total FX reserves, as the appreciation in the value of Gold is offsetting the decline in foreign currency assets. As of 14th November, the total foreign currency assets stood at US$562bn, down US$32bn since their level in late June. This decline has been almost fully offset by a US$22bn increase in the value of Gold holdings.

India’s inflation is now lower than that in the US. October will be the 5th consecutive month that the CPI Inflation in India will be lower than that in the USA. And while Inflation in India being lower is probably an exception, structurally inflation differentials seem to have moderated in the last few years. In the long run, it is the inflation differential that drives relative exchange rate movements, and thus if inflation differentials remain low, if not negative, this will be the biggest structural support for the INR against the USD. If inflation differentials remain low, that is…

In the short run, though, the persistent low inflation in India has opened up room for further rate cuts from the RBI. It now seems likely that the RBI will cut rates further in its next monetary policy meeting in early December, the rupee situation notwithstanding. If anything, a pick-up in growth pursuant to a loosening of monetary policy will support the rupee.

Inflation is rising in Japan. And the data released this week showed that CPI rose to 3% YoY in October, up 20bps over September and 80bps over the past year. A 3% inflation in Japan is as unthinkable as a 0% inflation in India. But that is precisely what we are faced with. Not surprisingly, interest rates in Japan, long used to ZIRP (Zero Interest Rate Policy), are rising.

CPI Inflation has averaged 3.3% YoY so far in 2025 (till Oct). Calendar year 2023 had similarly seen inflation average 3.3%. But before that, the last time inflation had averaged 3% or higher in Japan was in the year 1991! Between 1992 and 2021, a period of 30 years, the average annual inflation was 0.3% with 15 of those years seeing negative CPI!

In the U.S., the Bureau of Labour Statistics (finally!) released the non-farm payroll data. But for September. Total non-farm employment increased by 119,000 in September. However, job gains for July and August were revised downward by a combined 33,000, with August’s figure revised to –4,000. The unemployment rate edged up slightly from the previous month to 4.4% in September—the highest level in four years. That said, at 4.4% it is still fairly low. For reference, at the peak of Covid as well as the GFC, the unemployment rate was ~10%.

Post this data release however, the markets which were wavering over whether the Fed will cut rates in December have now decisively moved towards a rate cut – Fed fund futures point towards a 71% probability of a rate cut on 10th December now, up from 45% a week ago. Markets are now also pricing in a ~50% probability of another 25bps rate cut in 1Q26. This then becomes an added factor in favor of the RBI cutting interest rates when it meets (although the RBI rate decision is due before the Fed rate decision).

That’s it for now. See you next week!

This newsletter is structured into two sections:

• The first section tracks aggregate and sectoral trends so far

• The second dives into the standout company results during the last week

Want to dig deeper? Download the extended edition for full sector-wise company data and detailed performance notes.

This Week In Earnings Q2 Fy26 05

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Key Sectoral Trends

The week’s strongest impulses came again from Commodities, Energy, Healthcare, and Industrials, where both scale and margin leverage were the highlights.

• Commodities delivered one of the strongest performances of the week, with sector profits rising 44.1% and revenue up 13.4%. Metals and mining companies drove much of the surge: Tata Steel’s domestic delivery strength, Lloyds Metals’ volume-price combination, and Jindal Stainless’ mix improvements all fed into broader margin expansion across the pack. Fertilisers had a more mixed report: Rashtriya Chemicals & Fertilizers and EID Parry benefitted from firm demand, but National Fertilizers slipped into a small loss as rising gas costs overwhelmed subsidy support.

• Energy remained a major driver of profitability, with PAT growing nearly 52%. Gandhar Oil posted one of the cleanest improvements this season, driven by stronger demand, a better mix, and tighter cost control. ONGC also delivered a strong profit jump despite flat revenue, helped by firmer gas prices and improved operational efficiency. City-gas players such as Gujarat Gas and IGL had a tougher quarter, with rising input costs clearly narrowing margins even as volumes stayed healthy.

• Healthcare sustained its multi-week outperformance, with profits up 16% and revenue up 13%. The breadth of strong prints stood out: Biocon’s biologics and biosimilars scale-up, Max Healthcare’s rising occupancy and higher-acuity case mix. On the pharma side, JB Chemicals, Emcure, Glenmark (excluding its large one-off), and Granules India delivered margin improvement through better global product sales and more efficient APIs.

• Industrials posted another balanced week with profits rising 18.7%. Defense and engineering drove the upside: Bharat Dynamics’ revenue more than doubled on missile execution, while KEC International reported nearly twice the profit thanks to strong margins and record order books. Syrma SGS showed the strength of broad-based demand, while traditional EPC names like Afcons and Cochin Shipyard saw margins squeezed by monsoons, delays, and execution bottlenecks. HAL and Ashok Leyland delivered steady but slightly softer prints on mix and cost pressure.

• Consumer Discretionary grew 17.5% in profits despite highly divergent performances across the sector. Hero MotoCorp and PN Gadgil rode festive-season momentum and improving margins. Asian Paints turned modest revenue growth into a robust profit surge through mix upgrades and scale efficiencies. At the other end, Voltas struggled with a weak summer and higher spending, while Welspun Living faced the full weight of US tariffs and soft global demand. Autos, durables, and retail reflected a clear split between premium-led outperformers and those exposed to global or seasonal swings.

• FMCG revenues have risen by 10%, but profit growth has stayed muted at 1.7%. Margin pressure persisted even among companies that delivered strong top-line prints. KRBL and Parag Milk showed the benefits of a stronger mix and overseas traction, while Gujarat Ambuja Exports and Marico saw higher raw material and brand-building costs squeeze profitability.

• Financial Services have posted a 6.2% profit growth, consistent with the season’s stable tone. Bajaj Finance and Muthoot Finance continued to deliver broad-based strength, driven by loan growth, clean asset quality, and stronger NII and fee momentum. Infibeam Avenues reported a sharp revenue jump tied to scale and strategic repositioning, while Prithvi Exchange and Karnataka Bank weakened under narrower spreads, heavier taxation, and FX instability.

• Telecommunication delivered the biggest statistical jump of the week, with profit up 143%, though most of the improvement came from lower finance costs and a stabilising operational base.

• Services grew revenue by 14%, but PAT remained almost flat due to freight softness and integration-related pressures. Utilities saw profits fall 17%, reflecting cost pressures and last year’s high base, though Torrent Power and Tata Power posted strong underlying earnings.

Overall, this week’s results reinforce the season’s broader theme: margin gains, cost control, and mix upgrades are driving profitability more than top-line acceleration. Even where demand has been patchy (eg: consumer durables, capital-heavy infrastructure), disciplined execution has helped keep the earnings cycle on a firmer footing.

Key Results During The Week

• Tata Steel Ltd. (Commodities): Posted a standout quarter, with domestic steel deliveries lifting the top line and a sharp profit surge powered by stronger India operations and cleaner overseas performance. Cost discipline and a better product mix helped margins open up meaningfully, while recent strategic moves in downstream businesses signaled a push toward a more balanced, higher-value portfolio. Despite a choppy global backdrop, the company’s steady execution at home did most of the heavy lifting this time.

• Hero MotoCorp Ltd. (Consumer Discretionary): Logged record revenue and profit as festive-season demand stayed strong across bikes, scooters, and a growing EV line-up, with overseas markets also adding momentum and margins improving even while input costs and broader macro uncertainties remained in the backdrop.

• Asian Paints Ltd. (Consumer Discretionary): Turned in an impressive print, with modest revenue growth translating into a sharp profit jump as decorative volumes stayed strong and margins widened on a better mix and efficiencies, even as monsoon disruptions and input-cost worries lingered in the background.

• Bajaj Finance Ltd. (Financial Services): Delivered another strong quarter, with revenue and profit rising at a healthy clip as loan growth stayed broad-based, fees and NII picked up, and cleaner asset quality kept credit costs in check. Digital onboarding and product diversification continued to push the franchise’s usual momentum.

• Oil And Natural Gas Corporation Ltd. (Energy): Reported almost flat revenue but a strong profit jump, as lower crude realizations were offset by slightly higher output, firmer gas pricing and tighter cost control, lifting margins and supporting a higher dividend.

• Biocon Ltd. (Healthcare): Delivered a standout quarter, with healthy revenue growth turning into an outsized profit surge as biologics and generics gained scale, biosimilars lifted the mix, and last year’s one-offs fell out of the base. Stronger contributions from Syngene and steady regulatory approvals helped deepen operating leverage, resulting in a cleaner, more profitable print this time around.

• Max Healthcare Institute Ltd. (Healthcare): Enjoyed a strong quarter with higher patient volumes, better occupancy, and rising revenue per bed, all pushing margins up. Diagnostics and home care are also adding significant weight, making the overall network look more balanced than before.

• Bharat Dynamics Ltd. (Industrials): Delivered a standout quarter, with revenue more than doubling and profit jumping as missile programme execution picked up pace. Rising material costs followed the ramp-up, but order momentum still seems firmly intact. A thick defence order book and fresh missile contracts, such as the Invar deal, are likely to give Bharat Dynamics unusually clear multi-year visibility. If execution stays on track, that pipeline could smooth out year-to-year lumpiness and keep utilisation high.

• GMR Airports Infrastructure Ltd. (Services): Posted a strong rebound, with traffic recovery and higher aero and non-aero income driving a sharp revenue jump and a clean swing to profit. Margins improved too, helped by smoother operations and new commercial initiatives across key airports.

• Tata Power Co. Ltd. (Utilities): Turned in a solid quarter, with profit rising despite flat revenue as renewables, transmission, and distribution all delivered stronger earnings. New clean-energy capacity and a wider rooftop solar footprint kept momentum firm, even with a large arbitration matter still unresolved.

That’s it for this edition. There will be a few more results to analyse and unpack in the next week as the 2Q results season draws to a close. See you then…