Room To Rebound

Research evidence excerpt

Room To Rebound

Goldman Sachs India Strategy

1. Improved Macro Outlook Amid Domestic Resilience

India’s macro outlook has improved in recent weeks, amid lower commodity prices,

stabilized currency, resilient domestic growth, expectation of healthy profit delivery in

2Q, and potential EPS upgrades in select domestic pockets despite a broader earnings

downcycle. After being hit by the longest supply-driven oil rally in the last 15 years, and

a sharp currency depreciation, India’s current EPS downgrade cycle is on track to be the

weakest in recent history. Consensus has cut MSCI India’s CY26e earnings growth by 4pp

to 12%, coming closer towards our full-year estimate of 10%. The cuts could further

deepen in the next couple of months, per historical precedents, as analysts bake in

further impact of higher oil prices and weaker currency on corporate profits with a lag.

However, under the hood, analysts may have over-cut estimates on oil shock-related

impact in pockets of energy, consumer retail/services, chemicals/cement and staples.

On the other hand, cuts may have been understated in metals/mining and healthcare,

per past evidence. As we enter 2Q 2026 results season, analysts are estimating another

healthy quarter with 12% yoy profit growth for MSCI India ex-commodities, despite the

quarter falling in the middle of the energy crisis, reflecting India’s domestic resilience.

The dislocations between expected and actual oil-shock impacts on profits will yield

tactical opportunities for investors to trade.

Exhibit 1: India’s macro outlook has improved in recent Exhibit 2: Consensus is expecting healthy 12% yoy profit

weeks, albeit still weaker than pre-war months growth for MSCI India ex-commodities in 2Q CY26E

14% PPT contribution to MSCI India 2QCY26E EPS yoy growth