India Inc’s fourth quarter result (Q4FY16) season has almost come to an end.

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As per the market expectations, Q4FY16 earnings were ‘in-line’. However, ICICI Securities say that ‘downgrades; will continue in the current fiscal as well.

Here's why:

The report said that thought Q4FY16 earnings were largely in line with estimations but optimism around forward earnings continued to be pruned down. This resulted in a cut of 3% to FY17 and FY18 Nifty EPS (Earning per share)—primarily driven by downgrades in Banks, Pharma and Energy sectors.

Since February 2015, among Nifty stocks, negative EPS revisions were witnessed across all the sectors except Metals and Cement, said the report.

EPS downgrades were significant in sectors like Banks, Pharma and Energy.

The cause

ICICI Securities said that the improvement in earnings growth will be slow due to overall growth in infrastructure related order inflow which is expected to remain muted. It said that India’s consumption demand will be, at best, mixed, while the export sector will continue to face challenges on low global demand.

"We expect Nifty earnings to grow -10-12% in FY17 which factors in another 3-5% cut to FY17E earnings. We continue to be overweight Consumption, Industrials , Private banks, NBFC’s and Cement,” report added.