Something interesting is happening in corporate India.

And this time, it is not just the market moving.

The businesses are doing better.

With nearly 70% of the Nifty 500 results declared for Q2 FY27, the median company has reported:

Sales growth: 19.6%
Operating profit growth: 21.3%
PAT growth: 21.4%
EPS growth: 20.8%

That is a very strong quarter.

But the more interesting part is the direction.

A year ago, median sales growth was around 10%.

Profit growth was around 13%.

Now both are close to 20%.

This is not one large company pulling the index.

This is the median business improving.

That changes the conversation.

For a long time, large caps were steady—but not exciting.

Now, among the Nifty 100 companies that have reported:

Sales are up 18.9%.
PAT is up 21.3%.
EPS is up 19.9%.

Compare that with roughly 9–10% earnings growth a year ago.

That is almost a doubling of the growth rate.

And this matters because large caps are where foreign institutions can actually deploy serious money.

You cannot invest billions of dollars into tiny companies.

You need banks, autos, telecom, IT, industrials and other liquid businesses.

And suddenly, these companies are producing the earnings growth FIIs were waiting for.

Midcaps continue to justify the interest they have received.

Median PAT growth is around 20%, while EPS growth is nearly 25%.

More importantly, earnings growth has been improving over several quarters.

That is exactly what an expensive market needs.

Prices do not always have to fall for valuations to become reasonable.

Sometimes earnings simply catch up.

The smallcap numbers are impressive:

Sales: +19.6%
Operating profit: +23.4%
PAT: +24%

But there is one important caveat.

Only 162 of the 250 companies had reported in this dataset.

So the final picture can still change.

Promising? Absolutely.

Final verdict? Not yet.

Foreign investors spent most of 2026 selling India.

In the first ten months of the year, FPIs sold almost ₹3 lakh crore of equities.

Then suddenly—

in just eight trading sessions—

they bought ₹56,771 crore.

That is one of the sharpest reversals in foreign flows in years.

Why?

Because three things changed at roughly the same time.

First: earnings improved.

India was expensive when earnings were weak.

India looks very different when earnings are growing 20%+.

Second: large-cap valuations became more comfortable.

After months of underperformance, prices corrected while earnings improved.

That combination matters.

Third: global money started rotating.

The AI trade in the US, Korea, Taiwan and Japan saw a sharp correction, forcing global investors to look for alternatives. India, with relatively low direct AI exposure, suddenly became interesting again.

And then oil helped.

Crude fell sharply in early November, easing pressure on inflation, the rupee and India's import bill—three variables foreign investors watch very closely.

So the FII comeback is not random.

It is:

Better earnings + better valuations + global rotation + lower oil.

The next couple of months will answer one important question:

Was this just a strong quarter—or the beginning of an earnings cycle?

I would watch three things.

1. Earnings upgrades

If analysts begin increasing FY27 and FY28 estimates, the market gets real fundamental support.

2. Large-cap leadership

If FIIs continue buying, large caps may remain the first beneficiaries because that is where global money can move quickly.

3. Crude oil

If oil remains closer to the $80–90 zone rather than moving back above $100, India's macro picture becomes much easier.

Midcaps and smallcaps can still do well.

But from here, the market may become more selective.

Companies delivering real earnings growth may keep getting rewarded.

Companies surviving only on stories may not.

And perhaps that is the biggest change.

For much of 2026, India had a great long-term story—but earnings were not helping enough.

Now earnings have started showing up.

The market noticed. FIIs noticed.

The next question is whether this momentum continues into the next quarter. For learning more about sectoral leadership, write back to us.

Warm regards,

Tejas