As we are moving in FY26, two critical elements are influencing investor sentiment: the Q4 earnings season Results and the activity of Foreign Institutional Investors (FIIs). Feroze Azeez, Joint CEO at Anand Rathi Wealth, shares deep insights into both, offering a strategic perspective for market participants.
Q4 Earnings: Moderately Positive, But Uneven
According to Azeez, out of the 50 Nifty companies, 48 have declared their Q4 results. The consolidated earnings growth comes in at 10.9%, though this includes exceptional items like ITC’s business sale. Excluding such factors, the core earnings growth is around 4%, indicating that the earnings momentum is not as strong as headline numbers suggest.
For the full FY25, earnings growth stands at approximately 9%, a bit below the 10–11% initially expected. Mid and small-cap companies, in particular, have underperformed, with only a few names supporting index-level strength.
However, this modest growth sets up a lower base for FY25, which could create room for higher earnings expansion. If Nifty’s aggregate earnings rise to around 12.50%–13% in FY26 as anticipated, the index could potentially move toward 27,000–28,000—a bullish projection for the coming months.
FII Behavior: Mixed Strategies Driving Volatility
Azeez categorizes FIIs into three broad types:
1. External Index Fund Managers – These manage global investor capital with relatively stable and benchmark-driven inflows.
2. Proprietary Investors – Institutions like university endowments, which have seen recent withdrawals, especially from U.S.-based funds.
3. High-Frequency Traders – These FIIs are primarily focused on derivatives, often buying in the cash market to influence index movements and generate profits through options trading.
This third group has been largely responsible for sharp day-to-day volatility. Azeez points out that some of these FIIs deliberately book losses in the cash market to trigger stop-losses, then profit from exaggerated movements in the derivatives market. This practice has raised regulatory concerns and is likely to face scrutiny in the near future.
Disclaimer
The content of this blog is for informational purposes only and should not be considered as financial or investment advice. Readers are advised to consult their financial advisor before making any investment decisions. The opinions expressed are based on publicly available data and expert commentary and do not reflect any official position of the author or platform.
