Nifty Q4 result season pattern: Pre-rally, jitters, and the big comeback - Are you ready?

As history is known to rhyme, if not repeat, stock market investors are eyeing a well-established pattern: a pre-earnings rally, a correction during the results period, and a subsequent rebound. Historical data suggests that Nifty has seen an upswing in the three to four weeks before Q4 earnings 70% of the time with a clear 3%+ upside occurring in 30% of cases. However, the first 30 days of the earnings season have historically delivered flat returns with a negative bias.

But what happens next? The data shows that in the past decade, Nifty has delivered an average return of 5.7% in the three months following Q4 results, with an 8%+ gain in half of the cases. The next 6 months are even brighter with an average 8.75% return.

In the last 10 years, March month has been largely positive for the markets, apart from exceptions seen in 2015, when global concerns like China's Yuan devaluation and Brexit uncertainty led to volatility, and in 2018, when Nifty declined around 3% due to trade tensions and rising crude oil prices. The most extreme case came in March 2020, when the COVID-19 pandemic triggered a historic sell-off, marking one of the sharpest market crashes in recent history.


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Where Does the Market Stand Now?

As Q4 2025 unfolds, the Indian equity market is emerging from a rough patch. Since October 2024, Nifty has faced a sharp correction, weighed down by weak corporate earnings, stretched valuations, rising crude prices, and FII outflows. Political uncertainty surrounding the U.S. elections and tariff rate hikes under President Trump have further added to the volatility.

“However, the Indian markets have shown signs of resilience, with a positive 2%+ recovery in March 2025, suggesting that some of these concerns may have already been priced in. Going forward, the market’s ability to regain lost ground will largely depend on a recovery in corporate earnings, despite the lingering geopolitical overhang,” Om Ghawalkar, Market Analyst at Share.Market, told ET Markets.

Technicals Suggest Room for a Move Higher

“Over 60% of the Nifty 500 constituents have broken above their middle Bollinger bands,” says Anand James, Chief Market Strategist at Geojit Financial Services. “Given that we are coming off a 5.5-month-long downtrend, the odds of pushing further toward the upper Bollinger band are quite high.”

The Role of Earnings in the Next Leg of the Rally

With share prices being slave to earnings, the quarterly results season has been painful for investors for the last 3 quarters. Nifty consensus EPS estimates for CY25 have been cut by about 2% (YoY) in February with the conclusion of the December quarter earnings season.

“A market recovery is largely dependent on earnings outlook,” says Seshadri Sen, Head of Research & Strategist at Emkay Global Financial Services. “Downgrades have abated after the Q2 earnings season, but we do not read too much into that. We think FY26 Nifty EPS growth of 13.6% (Emkay estimates) is achievable, but consensus forecasts must walk the talk during the next earnings season (Apr-25), for the markets to stage a meaningful recovery. We do believe that the Nifty offers value below 22,500 with an 11% upside to our end-2025 target of 25,000.”

Morgan Stanley is ahead of the consensus on earnings. “Crucially, India's relative earnings growth is turning up based even on the more conservative consensus forecasts. In the meanwhile valuations are the most attractive since the Covid pandemic. The market has ignored the RBI's policy pivot, and a strong budget from the government, among other positive developments since early February. India's low beta characteristic makes it an ideal market for the uncertain macro environment that equities are dealing with. Importantly, our sentiment indicator is in strong buy territory,” said Ridham Desai of Morgan Stanley.

The Macro Picture: Growth with Uncertainty

ICRA expects 7-8% YoY revenue growth for India Inc. in Q4 FY2025, driven by a revival in rural demand and increased government spending. However, the firm warns of global risks. Trade tariffs and evolving global uncertainties can weigh on growth, says Kinjal Shah, Senior Vice President & Co-Group Head – Corporate Ratings at ICRA.

A crucial factor will be the resilience of consumer demand. “Rural demand is expected to be upbeat in H1 CY2025, aided by a strong kharif crop output and a favorable rabi season. Urban demand, after remaining sluggish, is expected to improve due to income-tax relief in the Union Budget, monetary easing by the RBI, and a moderation in food inflation,” Shah adds.

The Verdict: Will the Pattern Hold?

The setup for Q4 earnings season resembles previous years—cautious optimism, earnings-driven sentiment, and external risks. If historical trends hold, Nifty could see a pre-earnings rally, a modest dip during the results season, and a meaningful rebound in the following months.

But as the past has shown, surprises—be they geopolitical shocks, global policy moves, or unexpected earnings downgrades—can throw a wrench into the best-laid expectations. For investors, it’s all about staying nimble, tracking earnings surprises, and positioning for potential upside once the dust settles.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)