As the earnings season begins and companies start reporting their financial results, the Nifty 50 index is projected to deliver a revenue growth of 4.5 per cent for the second quarter of the fiscal year 2025 (FY25), according to a report by Axis Securities.

The report noted that Nifty will achieve growth in revenue of 4.5 per cent, earnings before interest, taxes, depreciation and amortization (EBITDA) of 6 per cent, and profit after tax (PAT) of 4.1 per cent respectively, during the quarter.

"Based on our and consensus estimates, we forecast Nifty to deliver a Revenue/EBITDA/PAT growth of 4.5 per cent/6 per cent/4.1 per cent respectively for the quarter," stated the report.

The report further explained that excluding companies in cyclical sectors like Oil & Gas and Metals, Nifty's performance is expected to be stronger, with revenue, EBITDA, and PAT growth likely to be 6.7 per cent, 11.3 per cent, and 10.2 per cent, respectively.

As per the report, several macroeconomic and sector-specific factors have influenced the second-quarter earnings season of FY25.Among the key factors are favourable rainfall across the country, which has positively impacted the agricultural sector, and an increase in the generation of electronic way (e-way) bills, which reflects higher goods movement across states.

Additionally, the report highlighted robust Goods and Services Tax (GST) collections and increased cargo traffic, which indicate a resilient macroeconomic outlook despite global challenges. Other notable aspects include the full-year Union Budget, moderation in power demand, as well as manufacturing and services PMI.

The report highlighted that the fluctuating oil prices have also played a role in shaping market sentiments during the quarter, as energy costs remain volatile.

The report also pointed to positive signals for rural recovery in the second half of FY25, driven by a normal monsoon, higher water reservoir levels, and government budgetary allocations that aim to stimulate rural demand and infrastructure development.

In terms of sectoral performance, the report expects earnings growth for the second quarter of FY25 to be driven by sectors such as Financials, Information Technology (IT), Telecom, Healthcare, and Utilities.

"Earnings growth for the quarter will be driven by Financials, IT, Telecom, Healthcare and Utilities while earnings for cyclical sectors like Oil & Gas and Metals is likely to see some decline" the report added.

While some moderation in overall earnings growth is anticipated for the quarter, the report emphasized that investor focus will be on company commentary regarding profit margins and future guidance for FY25, which will be crucial for market sentiment and investment decisions going forward.

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