IT Sector Set for April Rebound on Better Earnings: VK Vijayakumar

Why It Matters

The outlook ties corporate earnings to geopolitical risk, influencing investor allocation across high‑growth and defensive sectors. Understanding these dynamics helps firms and fund managers navigate fiscal pressures and currency volatility in a fragile macro environment.

Key Takeaways

• IT sector expected rebound in April after earnings beat
• Geopolitical tensions dictate market recovery timeline
• Fiscal deficit may rise due to excise‑duty cuts
• Financials, autos, defence, pharma forecast strong earnings
• FMCG likely faces pressure from inflation

Pulse Analysis

The Indian equity market entered FY’26 on a sour note, with the Nifty 50 and Sensex delivering near‑zero returns and slipping 5% and 7% respectively. A confluence of factors—escalating conflicts in West Asia, soaring crude oil above $100 a barrel, and persistent foreign portfolio investor outflows—has eroded investor confidence and pressured corporate balance sheets. This backdrop has amplified concerns over a widening fiscal deficit, as the government’s recent excise‑duty reductions to cushion fuel costs threaten to fuel inflation and further rupee depreciation.

Against this turbulence, VK Vijayakumar of Geojit Investments projects a modest but meaningful recovery for the IT sector in April, driven by earnings that are unlikely to disappoint after the recent Anthropic shock. He anticipates FY’27 earnings growth of 12‑14% if oil prices stabilize, with financials, automobiles, auto ancillaries, defence, capital‑goods, capital‑market‑related stocks and pharmaceuticals positioned as the strongest performers. Conversely, the FMCG segment may feel the pinch of any pass‑through from higher crude costs, potentially dampening consumer spending once inflation gains traction.

For investors, the key takeaway is that market direction will hinge on the duration and intensity of the West Asian conflict. A rapid de‑escalation could spark a sharp rally, while a protracted war would extend the recovery timeline and keep the IPO market subdued. Strategic allocation toward fairly valued, high‑growth sectors such as IT, finance and pharma, while maintaining vigilance on fiscal health and currency risks, will be essential for navigating the uncertain macro environment.