Article

Earnings have led market near the all-time highs

date November,  2022
time 2 mins read

In the last couple of months, the Indian equity markets have been on a winning streak gaining more than 2800 points on the benchmark index in a very short time frame. Attractive valuations followed by FIIs inflows have fuelled the rally across the various sectors and broader markets as well.

This recent rally was led by Auto, Banking, and select heavyweight stocks followed by other sectors like chemicals, energy, and metals. Among the broader markets, various sectors have gained tremendous momentum in the last few weeks and have given handsome returns to investors.

India Inc. Q2 earnings have so far as per the market expectations excluding the BFSI theme which have come out with stellar Q2 numbers barring a couple of exceptions. Companies that have high exposure to the commodities as their input cost have shown some weak numbers such as Cement and Metals thanks to the soaring commodity prices and weakening rupee which had a dent in the operating profits. The consumer sector has been under pressure in Q2 but the numbers are expected to improve thanks to the strong festive season and improved market sentiments.

The real impact of rising crude oil, global slowdown, burning inflation, and weakening rupee will be seen in Q3 which major corporates have already highlighted in their recent media interactions. Indian corporates are also having a close eye on this festive season to cash in the pent-up demand of the corona period last year. Retail sales are expected to be bumper this year as consumer footfall is expected to increase after 2.5 years of the pandemic time when the common people have curtailed their shopping due to uncertain times.

The next quarterly earnings are likely to be more dependent on macro factors and consumer spending where robust numbers are expected to continue from banking and Telecom while many other sectors like IT, pharma, and Oil & Gas are expected to remain flat to muted.

Indian corporates are also having a close eye on this festive season to cash in the pent-up demand of the corona period last year. Retail sales are expected to be bumper this year as consumer footfall is expected to increase after 2.5 years of the pandemic time when the common people have curtailed their shopping due to uncertain times.

Indian markets will be under the grip of extreme volatility amid global market weakness, rising inflation pressures, and the weakening rupee but the overall sentiments on the street are expected to be optimistic in the near-term period. Short-term traders may keep their existing positions hedged to save themselves from global volatility.