Brent crude is trading around $115 per barrel, down only about 1% from recent six-month highs. That is not enough relief for oil-intensive sectors. For aviation, fuel is the largest cost line. InterGlobe Aviation reported that average Brent was up about 50% year-on-year in Q1 FY27, and Singapore jet fuel rose nearly 120%. Even with a domestic ATF price cap, fuel cost per available seat kilometre rose about 80%. Yield growth was above 20%, but cost increases were above 30%, which compressed margins. The airline reported a net loss of ₹238 crore on sales of ₹24,584 crore. Transcript +1
Logistics and manufacturers face similar pressure. Naphtha, a key petrochemical input, is up about 79% year-on-year. Steel companies like Tata Steel and JSW Steel are also feeling the heat from energy and logistics costs, even though their main raw material is coking coal. Tata Steel flagged that West Asia developments continue to pressure input costs, energy prices and logistics. A weaker rupee compounds the problem. USD/INR is around 95.4, down about 8% over the past year. That raises the rupee cost of servicing dollar debt and importing equipment. For Bharti Airtel, which has significant foreign-currency borrowings, management has noted that INR depreciation is raising capex costs. Tata Communications, a net earner of foreign currency, benefits from translation gains but faces mark-to-market swap losses on some hedges. Transcript +2
Elevated crude also affects the cost of capital. Higher oil widens India's import bill, weakens the rupee and raises inflation expectations. That tends to push up bond yields and equity risk premiums, making foreign portfolio investors more cautious. In October through 23 October, foreign investors sold a net ₹51,466 crore of Indian equities, while domestic institutions bought ₹59,110 crore. Heavy importers like steel companies are particularly exposed to this risk-off sentiment.
Kotak Mahindra Bank delivered a strong Q2 FY27 performance, which prompted several brokerages to raise target prices. Standalone profit after tax rose 29% year-on-year to ₹4,212 crore, while consolidated PAT was up 26% to ₹5,645 crore. Net interest income grew 16%, and fee income rose 21%. Asset quality improved, with gross NPAs falling to 1.04% and annualised credit cost dropping to 0.35%. Brokerages like Motilal Oswal, Jefferies and Goldman Sachs have Buy ratings with targets ranging from ₹500 to ₹540. Investor Presentation +1
Leadership clarity helped. The RBI approved Anup Kumar Saha as Managing Director and CEO for three years from January 1, 2027. That resolved succession uncertainty and supported the stock's rally.
HDFC Bank presents a contrast. The stock has fallen about 26% in 2026 as of late August. While the bank has a new Chairman, Rajiv Kumar, reports suggest CEO Sashidhar Jagdishan is stepping down, creating a leadership vacuum. Brokerages like Jefferies and Motilal Oswal remain positive but have cut targets, citing near-term risks to deposit mobilisation and fee income. HDFC Bank's underperformance versus Nifty Bank over the past six months reflects this uncertainty.
The RBI has finalised new leverage ratio and operational risk capital norms, effective April 1, 2027. The minimum leverage ratio will be 4% for domestic systemically important banks (D-SIBs) and 3.5% for others. Exposures must be measured at gross values, with limited netting. The operational risk framework will use a Business Indicator with three components: interest, lease and dividend; services; and financial.
For banks like Bank of Maharashtra, Indian Overseas Bank and IndusInd Bank, these rules mean higher capital requirements for certain exposures, particularly derivatives and off-balance-sheet items. Bank of Maharashtra and Indian Overseas Bank currently have strong capital buffers, with CET1 ratios above 15% and ROEs near 25%. However, high ROEs often imply thin equity relative to assets. Raising capital to meet the new norms could dilute ROE. IndusInd Bank's CRAR fell 56 bps quarter-on-quarter in Q2 FY27, and its latest CET1 figure is from March 2026, so its headroom is less clear. Banks will need to re-map exposures and rebuild Pillar 3 reporting before the deadline. Investor Presentation +3
Infosys cut its FY27 revenue growth guidance for the second consecutive quarter, now to 1–2% in constant currency. Q2 revenue grew just 1.5% year-on-year in constant currency. Management cited softer volumes, pricing pressure and weak discretionary spending in retail, high-tech and software. North America remains a concern, though specific regional growth figures were not available. Despite the weak top line, operating margin held at 21%, and AI revenue grew 29% quarter-on-quarter to 10.5% of total revenue. Large deal wins were strong at $5.2 billion, but conversion to revenue takes time.
Coforge tells a different story. It raised its FY27 EBIT margin guidance to 16% from 15.5% after reporting a 56.5% jump in net profit. Revenue rose 53.6%, but organic constant-currency growth was 3.8% sequentially, with the Encora acquisition driving much of the headline growth. The company signed eight large deals, its highest ever in a quarter, and its executable order book grew 45% year-on-year. Management attributes margin gains to AI-driven productivity, cost controls and the exit of a low-margin portfolio. This shows that AI and deal wins can offset some legacy deflation, but the benefit is uneven across the sector. Transcript
Tata Communications is making a different bet. It announced plans to invest about $450 million (₹4,280 crore) in a 10,000-km high-speed fibre "AI super highway" to connect India's data centre hubs. The first phase covers Mumbai–Pune–Hyderabad–Chennai, with later phases reaching eastern and western cities. CEO Ganesh Lakshminarayanan estimates the domestic data centre-to-data centre connectivity market could exceed $1 billion over the medium term. The company says a growing proportion of expansion is backed by anchor customer commitments. However, no payback period or return target was disclosed. The investment is large against Q2 EBITDA of ₹1,422 crore, and execution risks include phase delays and competition from hyperscalers building their own networks.
Dr. Reddy's Laboratories surged as much as 7.75% after Q2 results, despite a 36% fall in net profit. The stock jumped because EBITDA margin came in at 20.6%, well above market expectations of around 16%. Adjusted margins were even stronger, up about 550–580 basis points quarter-on-quarter. Drivers included better product mix, cost efficiencies and a foreign-exchange tailwind. Brokerages like JPMorgan upgraded the stock to Neutral, citing a more balanced risk-reward profile after years of underperformance. However, many analysts remain cautious due to valuation concerns and uncertainty around the sustainability of margin gains. Eris Lifesciences reported a 39% rise in consolidated net profit, but its EBITDA margin fell to 34.7% from 36.4% a year ago, showing that margin pressure is industry-wide.
Ather Energy turned profitable for the first time, posting a net profit of ₹1.26 crore against a loss of ₹154 crore a year ago. Revenue rose 63% to ₹1,464 crore, and EBITDA margin turned positive at 5%. The company sold about 93,000 vehicles, up 42%, and its Hosur plant operated at 98% capacity. Enquiries rose 109% and pre-orders more than doubled, indicating strong demand. However, market share fell to 15.1% from 17.2% as industry registrations grew faster. Profitability remains thin, and input costs for aluminium, copper and electronic components are rising. Capacity expansion plans are aggressive, targeting over 1.14 million units by Q2 FY28, but execution will be key. Investor Presentation
Public sector banks had a standout quarter. Bank of Maharashtra reported a 41.4% jump in net profit to ₹2,310 crore, driven by a 22% rise in net interest income and improved asset quality. Gross NPAs fell to 1.25%, and net NPAs to 0.12%. Indian Overseas Bank's profit rose 56% to ₹1,912 crore, with gross NPAs improving to 1.19%. Both banks are growing loans rapidly and have strong capital buffers. However, sustainability questions linger. IOB guides credit cost at 0.35–0.40% and ROA at about 1.4–1.5%, suggesting some normalisation ahead. Rising bond yields and deposit costs could pressure margins. In the broader NBFC sector, credit costs are rising in some pockets, particularly in microfinance and unsecured lending, though vehicle finance has seen an earnings upgrade cycle. Shriram Finance cut its FY27 AUM growth guidance to 15–17% and flagged higher credit costs, citing drought stress in rural and MSME segments. Transcript +1
The Q2 earnings season paints a picture of divergence. Banks and select exporters are benefiting from strong demand and operational improvements, but oil-intensive sectors and companies facing legacy headwinds are struggling. Geopolitical risks in West Asia keep crude elevated, which feeds through to inflation, the rupee and the cost of capital. New regulations will force banks to hold more capital against certain risks, potentially dampening ROE. In IT, AI and large deals are driving growth for some, but others are grappling with weak discretionary spending. For investors, the key is to distinguish between structural improvements and cyclical bounces, and to build in a margin of safety for the macro risks that are not going away anytime soon.
