The oil and gas sector is likely to spoil the show for the first quarter ended June 2007, according to a preview of the Q1 results by CLSA.

The study predicts that the Sensex companies are expected to show marginal 6 per cent growth in profit, while the growth for the oil companies is likely to be higher at 23.4 per cent.

However, the growth in the oil companies' Q1 profits this year is expected to fall short by more than 10 per cent compared with the 36 per cent growth in the year-ago period.

The oil and gas sector had played a spoilsport in the fourth quarter of 2006-07, with profits dipping to 25.2 per cent from a healthy growth rate of 34.6 per cent in the third quarter of 2006-07.

The Q4 results preview reveals that the three sectors -- software, telecom and banking -- will together account for 62 per cent of the growth in incremental earnings.

The telecom and the capital goods sectors will shine once again, with profits rising by over 85 per cent and 44 per cent, respectively.

The pharmaceuticals sector may register 32 per cent growth following a boost from currency conversion on the outstanding FCCBs.

The impact of interest rates will be reflected in the profits of the automobile companies (down 2 per cent), while the rupee appreciation is set to spoil the party for the software sector (27 per cent growth in Q1 FY08 against 52 per cent in Q4 FY07) and the metals sector (down 0.5 per cent against 20 per cent in the period under review).

The price curbs on cement will start showing effect in their Q1 profit growth, slowing down to 19 per cent compared with a robust 79 per cent in the fourth quarter of 2006-07.

The operating margins of non-oil and gas companies are likely to rise 40 basis points led by margin improvements in the telecom, power and petrochemicals sectors.

The slowdown will be more obvious for 2007-08 on account of lower profitability in commodities and a moderation in the growth of automobiles, cement and software.

The trends in the earnings of the banking sector appear encouraging, with banks expected to grow by 26 per cent in the June quarter compared with 16 per cent growth in the March quarter.

The automobile companies are likely to register 7 per cent revenue growth, led by sales of cars and utility vehicles.

However, the decline in margins by 170 basis points will drive down the growth in  profits.

Larsen & Toubro, buoyed by robust order books, is set to lead the capital goods sector. The fast moving consumer goods companies may record double-digit growth in revenues on favourable macro-economic conditions.

The profit margins for the personal care companies are likely to move up on rise in their product prices. However, VAT on cigarettes may burn a hole in ITC's volume growth.

Meanwhile, a cut in aluminium prices due to weaker international prices and a stronger rupee are set to impact  the realisation for Hindalco.

Though Tata Steel will witness higher volumes, its realisation will also be affected as a result of the strong rupee. ONGC [Get Quote] is set to register flat profits as the higher subsidy-sharing is set to shave off the gains from higher crude oil prices.

However, Reliance Industries is likely will to benefit from a sharp improvement in refining margins.