The June quarter earnings season was subdued, giving little reason for investors to get excited about Indian stocks. Of course, there were some firms that did better than expectations; but, by and large, gains from the economic recovery are yet to be seen in the results of Indian companies.

Analysts at Kotak Institutional Equities wrote to clients, “In 1QFY17, banks’ slippages and NPLs (non-performing loans) stayed high, consumer products’ volume growth showed mixed trends and industrial companies’ order booking declined sharply."

According to Motilal Oswal Securities Ltd’s calculations, the net profit of Sensex firms declined 2.1% in the June quarter. The brokerage cut its fiscal 2017 aggregate earnings estimates for Sensex firms by 2.5% after the results season. Worse still, the brokerage downgraded its ratings for 19 stocks, while upgrading its rating for only one stock.

It must be noted that the adoption of Ind-AS (India Accounting Standards) for non-financial companies since the June quarter makes comparisons difficult. For perspective, firms restated the year-ago June quarter results according to Ind-AS standards, leading to a large variance in some cases. For Tata Motors Ltd, the profit for the year-ago June quarter was restated upwards by around Rs2,500 crore, largely owing to the difference in the way gains/losses on forex derivatives are accounted for. Devoid of such a large gain this time around, profit fell sharply.

It makes more sense, therefore, to look at other trends in major industries such as banking, consumer goods and capital goods. Credit off-take was weak in the June quarter, with credit to industry being almost flat compared with year-ago levels. Provisions for bad loans continued to be high, although in the case of public sector banks, they were not as bad as in the March quarter. But that’s hardly any consolation. “Domestic revenues for industrial firms continued to be weak We attribute the weakness in domestic revenues to (1) continued subdued investment activity in general and (2) slow execution in projects of companies with poor financials or in projects with underlying challenges such as land acquisition, fuel shortage and resource non-availability," Kotak’s analysts write.

Order inflows fell sharply, with industry leaders Bharat Heavy Electricals Ltd and Larsen and Toubro Ltd reporting declines as well. While some firms in the sector reported growth in order inflows, it’s too early to pronounce a recovery.

Of course, based on the valuations of these firms, investors are pricing in a strong recovery fairly soon. Based on where things stand, it looks like investors may be disappointed with results in the near-term.

Growth in the telecom industry continued to decline, especially in the data segment. Since telecom firms have made large investments in data spectrum and network rollouts, the slowing growth is a big negative, as return expectations on investments will now be much lower. With Reliance Jio Infocomm Ltd’s launch at fairly low tariffs, things can be expected to deteriorate further. Information technology (IT) companies reported subdued numbers for the June quarter. Although this is typically a period of strong demand for the industry, growth was muted for large IT firms. Things have worsened for IT firms since the June quarter announcement, which means near-term performance may continue to disappoint.

According to Kotak’s analysts, consumption growth showed signs of a modest recovery, although trends in volume growth were varied. “Growth of consumer product companies showed a significant dispersion with firms such as Asian Paints, Godrej Consumer and Marico reporting double-digit volume growth and others such as Bajaj Corp., GSK Consumer and Titan (Jewellery) seeing low growth or declines in volumes," they wrote in a note to clients. Companies in this sector did well on the margins front, thanks to the sharp drop in input prices since early 2015.

Demand for automobiles remained strong, although Maruti Suzuki India Ltd was impacted because supplies from a key vendor were disrupted. Growth in commercial vehicle sales came off compared with the year ago June quarter, and recent trends show that growth has declined even further.

Cement firms, meanwhile, have done well, with volumes increasing in the high single digits. And, thanks to the price hikes earlier in the year, profitability of cement firms has risen at a brisk pace. Of course, cement stocks are currently pricing further improvement in profitability and much more, with valuations being around 40% higher, compared with their historical average.

Overall market valuations, too, look stretched at 19-20 times estimated FY17 earnings for the Nifty. If earnings continue getting revised downward, as they have in the past few quarters, investors would be in for a rude shock.

A look at how the sectors fared:

Auto: operating margins hold out in spite of odds

Aviation: SpiceJet flies higher than Jet Airways and IndiGo in Q1

Banking: the weak, the vulnerable and the winners

Capital goods: Mixed bag performance due to Ind-AS norms

Cement: Lower costs aid margins

Consumer goods: slow growth remains a bugbear

Information technology: slowdown worse than expected

Infrastructure: it’s roads all the way

Metals: the rising tide of prices

Oil: inventory gains boost refiners’ margins

Pharma: regulatory logjam continues

Power: public enterprises hold fort

Real estate: flashes of recovery in some pockets

Retail: firms struggle with weak demand

Telecom: slowing data growth a worry for industry