Analysts noted that Indian companies have experienced the largest cut in profit forecasts in Asia, attributed to the potential impact of high U.S. tariffs.
Decline in Profit Forecasts and Its Causes
According to LSEG IBES data, 12-month forward earnings projections for India’s large- and mid-cap firms fell by 1.2% over the past two weeks, marking the largest decline in the region. This downgrade follows a muted quarter, extending the slowdown that began last year.
Economic Implications for India
Although India’s demand is mainly domestic and only 9% of Nifty 50 companies' revenue comes from the U.S., tariff rates of up to 50% on exports raise risks for the wider economy. Estimates suggest that keeping a 50% levy could shave 1 percentage point off India’s GDP growth over time.
Outlook on Tax Reforms and GDP Growth
Analysts expect planned cuts to consumption taxes to support growth. Economists at Standard Chartered estimate these measures could add 0.35-0.45 percentage points to GDP in the fiscal year ending March 2027.
The downgrade in profit forecasts and shifts in investor sentiment indicate that Indian companies are facing challenging times amid global trade tensions and changing economic conditions.
