Banks
The banking sector is expected to show a gradual recovery in net interest margins (NIMs) as deposit repricing gains traction following RBI’s cumulative 125-basis-point rate cuts in 2025. Steady loan growth and healthy asset quality should aid earnings growth though geopolitical tensions in West Asia may impact credit demand. After slowing to 9.5% in the June 2025 quarter, credit growth rebounded to 14.5% in the December quarter and moderated slightly to around 14% in February, according to RBI data. In comparison, the deposit growth remained slow: 11% in the June quarter, 12.7% in the December quarter and 11.9% in February. Given a lagging deposit growth amid credit expansion, banks may have to deal with higher cost of funds in the short term in a bid to grow the deposit base. A benign interest-rate environment, a pick-up in private capital expenditure, and improving consumption aided by GST rationalisation are likely to support credit growth.
Fast Moving Consumer Goods
With raw material costs stabilising and prices of several agri-commodities cooling, analysts expect better earnings visibility for fast moving consumer goods (FMCG) companies through FY27, supported by the prospect of a strong summer compared with the previous year’s weak demand. After a bout of GST-led lower prices, companies may raise prices selectively depending on category trends while packaged foods, and beauty and personal care are expected to sustain volume traction from lower effective prices.
In edible oils, elevated product prices affected revenue growth over the past few quarters. With normalising prices and category premiumisation, companies such as Marico expect the edible oils business to return to growth path while AWL Agri Business (erstwhile Adani Wilmar) has guided for a single-digit growth. In addition, soft copra price, which is 30% below peak, may ease further, thereby, aiding hair oil segment.
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However, if petroleum prices remain elevated, they would push up packaging and logistics costs. An early onset of summer augurs well for room air conditioners amid the likelihood of a longer season. Industry growth is pegged at 45-50% in 2026. However, pricing pressure is set to persist as GST-cut benefits have been offset by higher prices of copper and cost inflation due to crude-linked plastics and new BEE norms.
IT
IT sector indices are down about 24% so far in 2026 and over 20% year-on-year, dented by concerns over AI-led disruption to traditional IT services models and global macro uncertainty amid geopolitical tensions in West Asia. Analysts have responded by cutting target prices for most tier-I and mid-tier IT firms by 10-38%.
While valuations have taken a beating, it has also created selective investment opportunities. Companies with steady deal wins, strong order books and strategic partnerships in niche AI capabilities are better positioned. Headcount optimisation and large-scale reskilling will be key as AI automates routine work.
Among verticals, banking, financial services and insurance are likely to remain resilient in FY27, supported by continued technology spending by global banks. Retail, manufacturing, travel and transportation remain weak, though telecom is showing early signs of recovery on network modernisation and AI-driven efficiencies. Analysts favour Infosys, HCL Technologies and Tech Mahindra among large caps, and Coforge and Persistent in the mid-tier space.
Oil and Gas
A sharp rise in crude oil prices will have a mixed impact on the oil and gas sector, potentially boosting earnings for upstream companies while compressing margins at oil marketing companies (OMCs) in the next financial year. Brent crude, which averaged $66 per barrel in January, now trades at around $102 per barrel, lifting the March average to around $95 per barrel.
While views differ on how high oil prices can climb, analysts broadly agree that a return to $60 per barrel levels appears unlikely anytime soon. If crude prices stay above $100 per barrel, upstream players such as ONGC and Oil India are expected to benefit from stronger price realisations, with margins expanding as long as operating costs remain stable.
However, the upside will be shaped by government policies on windfall taxes and subsidy sharing. JM Financial Institutional Securities estimates that every $1 increase in crude prices lifts upstream earnings by 1.5-2%.
For OMCs, rising crude prices remain a headwind, as gross refining margins (GRMs) come under pressure when retail prices of petrol and diesel do not adjust immediately.
With pump prices effectively delinked from global crude movements, OMCs face inventory losses and fuel under-recoveries, weighing on profitability and cash flows. Higher crude prices also inflate LPG under-recoveries, further eroding earnings. While government interventions such as excise duty cuts can cushion margins by easing the burden of higher input costs, the timing and scale of such measures will be critical for OMC earnings stability.
PHARMACEUTICALS
The pharma sector is bracing for cost pressure as the West Asian conflict disrupts shipping routes and petrochemical supplies, pushing up prices of key active pharmaceutical ingredients, solvents and other raw materials and threatening higher medicine costs or even shortages if the disruptions persist.
This apart, India’s semaglutide market has entered a high-volume, low-margin phase after patent expiry, resulting in 85-90% lower prices and drawing in multiple generic players. The sharp fall in monthly therapy costs to Rs 1,300–8,000 from the earlier Rs 8,800–16,400, has widened access among the country’s large obesity and metabolic-risk population, but intense competition and rapid commoditisation mean only modest earnings gains for most pharma companies.
Motilal Oswal Financial Services expects incremental sales improvement in low single digits from the semaglutide opportunity.