Quarterly Earnings Trend: A Gradual Upswing

The latest results for the quarter ended March 2026 indicate a clear upward trajectory in the proportion of companies reporting positive earnings. At 53.0%, this represents a significant improvement compared to 46.0% in December 2025, 44.0% in September 2025, and 42.0% in June 2025. This gradual increase suggests that corporate profitability is gaining momentum, potentially reflecting stabilising economic conditions and improved operational efficiencies across sectors.

However, the distribution of positive results varies markedly by market capitalisation. Large caps have lagged with only 38.0% reporting positive results, whereas mid caps and small caps have delivered stronger performances with 60.0% and 58.0% respectively. This divergence highlights the resilience and growth potential of smaller companies in the current market environment, possibly driven by niche market leadership and agility in adapting to changing economic dynamics.

Sectoral Highlights: Banking and Power Lead the Charge

Within the large cap universe, ICICI Bank has emerged as a standout performer in the private sector banking segment, underpinning the sector’s ongoing recovery. The bank’s results reflect steady net interest income growth and controlled asset quality pressures, which have bolstered investor confidence.

Mid cap results have been led by Yes Bank, also in the private sector banking space, which has demonstrated a remarkable turnaround. The bank’s March 2026 quarter results reveal a 44.7% growth in profit after tax (PAT) to ₹1,068.42 crores, alongside a reduction in gross non-performing assets (NPA) to 1.30% and net NPA to a mere 0.20%. Net interest income (NII) surged to ₹2,637.70 crores, while interest earned reached ₹7,650.90 crores, both marking record highs. Despite a negative PBDIT of ₹-111.93 crores and PBT less other income at ₹-299.48 crores, the overall financial performance has been rated very positive, with the company’s score improving from 15 to 20 over the past three months. This improvement has shifted market sentiment from bearish to mildly bearish, reflecting cautious optimism among investors.

Small caps have also delivered impressive results, with Waaree Renewable Energy in the power sector leading the pack. Alongside Waaree, companies such as SG Finserve (NBFC sector) and Bajaj Consumer (FMCG sector) have posted top results, underscoring the diversity of growth drivers within the small cap space. These companies have benefited from sector-specific tailwinds, including rising demand for renewable energy and consumer staples, which have supported margin expansion and revenue growth.

Financial Metrics and Quality Assessment

The aggregate earnings growth for the quarter is bolstered by the strong performances in mid and small caps, which have outpaced large caps in terms of positive earnings surprises. The improvement in asset quality metrics, particularly in the banking sector, has been a key contributor to this trend. For instance, Yes Bank’s gross and net NPAs have reached multi-quarter lows, signalling enhanced credit discipline and recovery efforts.

Despite some pockets of weakness, such as the negative PBDIT and PBT less other income figures for Yes Bank, the overall trajectory remains positive. The bank’s earnings per share (EPS) for the quarter stood at ₹0.34, the highest in recent quarters, reflecting improved profitability on a per-share basis. This nuanced performance highlights the importance of analysing both top-line growth and bottom-line quality to gauge sustainable earnings momentum.

Market Outlook and Upcoming Results

With 63 companies having declared results for the March 2026 quarter, the earnings season is progressing steadily. The next set of results to watch includes Billionbrains Garage Ventures Ltd, Bank of Maharashtra, and Ugro Capital Ltd, all scheduled to report on 20 April 2026. These companies operate in diverse sectors, and their performance will provide further clarity on sectoral trends and market sentiment heading into the new fiscal year.

Investors should continue to monitor earnings quality, margin trends, and asset quality metrics closely, especially in the banking and financial services sectors, which remain pivotal to overall market direction. The improving trend in positive results suggests a cautiously optimistic environment, but selective stock picking remains essential given the mixed outcomes across market caps.

Conclusion: Navigating a Mixed Earnings Landscape

The March 2026 quarterly earnings season has revealed a market characterised by gradual improvement and sectoral differentiation. While large caps have shown modest positive results, mid and small caps have outperformed, driven by strong earnings growth and improving fundamentals. Banking and power sectors have been key contributors to this trend, with companies like ICICI Bank, Yes Bank, and Waaree Renewable Energy setting the pace.

Investors are advised to focus on companies demonstrating consistent earnings quality, improving asset quality, and sustainable growth prospects. The evolving earnings landscape underscores the importance of a balanced portfolio approach that captures growth opportunities in mid and small caps while maintaining exposure to stable large caps with reliable fundamentals.

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