The March quarter of the financial year 2024-25 saw a better-than-expected 10% earnings growth after remaining flat for three straight quarters, according to Motilal Oswal's Gautam Duggad.Based on the performance, the brokerage has given the highest earnings upgrades to Bharat Electronics Ltd., Bharti Airtel Ltd. and Hindalco Industries Ltd. for the financial year ending March 2026.Duggad, head of research – Institutional Equities at the brokerage, told NDTV Profit that the March quarter earnings spread was broad-based, with 75% of their covered universe meeting or exceeding estimates; 19 sectors performed at or above expectations, while only three fell short.Midcap companies emerged as the top performers this season, achieving 19% earnings growth across 89 covered names. Conversely, small caps were a "sour point", experiencing a 16% decline, primarily driven by the financial sector, and 39% of the coverage universe missed estimates, Duggad said.He projects a 12% overall earnings growth in the ongoing financial year and 15% in the following year. However, the analyst cut Nifty EPS by 1.9% and 1.1% for the current and the next financial years, respectively.Duggad stated that the Nifty is currently trading at 21.5 times its one-year forward PE, which is slightly above its long-period average of 20, indicating limited room for further expansion. He added that midcaps and smallcaps continue to trade at a substantial premium compared to their respective long-term averages and the Nifty.Looking ahead, auto earnings are anticipated to be flat in the current 2025-26, while private banks are expected to see single-digit growth.Duggad expects decent growth in sectors such as non-banking financial companies, cement, capital goods, pharmaceuticals, and commodities.Specifically, he expects a 30% growth in metals due to a low base and a 12% growth in the oil and gas sector.Gautam Duggad said gthe Nifty is trading above its long-period PE average, indicating limited room for further expansion. (Source: NDTV Profit) MOFSL's Top Earnings Upgrades In FY26E: Bharat Electronics (7.1%)Bharti Airtel (6.6%)Hindalco (5.8%)Adani Ports (4.6%)M&M (4.4%).MOFSL's Top Earnings Downgrades In FY26E: Eternal (-53.9%)IndusInd Bank (-45.6%)ONGC (-13.4%)Tata Motors (-11.6%)JSW Steel (-8.5%)Stocks To Buy: Federal Bank, HUDCO, Jyoti CNC, SBFC Automation, Union BankUpside In DefenceWith regard to defence stocks, Duggad noted that the total market capitalisation of the sector reached its highest point in July 2024, subsequently declining by 35% by March.Now, the market cap is nearing its previous peak, having risen by 65% since March. He anticipates that the defence sector will remain attractive over the next three to five years, driven by the push for indigenous production. However, he cautioned that the potential growth in these stocks has already been factored into their current prices.Motilal Oswal has given a 7% earnings upgrade for Bharat Electronics Ltd. in the current financial year.Decoding Q4 FY25 Earnings: Dolat Capital's Amit Khurana Bullish On These Sectors. Read more on Markets by NDTV Profit.