This year, the combined net profit of 24 index companies, which have declared their June-20 numbers, has declined by 37 per cent year on year, while their revenues, including other income, is down by 21 per cent YoY so far.
Smaller stocks continue to shine at the bourses. The BSE MidCap index is up 18 per cent since the beginning of January this year against a 5 per cent rise in the Sensex during the period. With the current rally, the mid-cap index has doubled in value since the end of March 2020 against a 70 per cent rally in the Sensex during the period. On Tuesday, the mid-cap index closed at 21,232, as compared to 17,941 at the end of December 2020. In the same period, the benchmark index moved from 47,751 to 50,193.
The combined profit before tax of 748 companies, which have declared their results for Q1FY21, is down 46 per cent YoY. Their net sales went down by a quarter as the Covid-19 lockdown led to a sharp fall in economic activity.
Portfolio returns, say analysts at Morgan Stanley, are more likely to be driven by bottom-up stock-picking rather than top-down macro forces.
While sales momentum from rural areas may last another three to six months, sales growth in urban areas could stage a comeback by next year's June quarter as people learn to live with the coronavirus and economic activity gradually improves in the cities.
The trend in corporate earnings suggests that index earnings could fall to the levels last seen in early 2014.
Worries remain on earnings-valuations mismatch, global issues; resolution of the MAT row could be biggest positive trigger
Automobile company Tata Motors, metals and mining major Vedanta, oil marketing firm Bharat Petroleum Corporation (BPCL), private sector IndusInd Bank, and two-wheeler major Bajaj Auto have witnessed their market cap slip below the Rs 1-trillion mark this year.
This is first time in 25 years that a benchmark equity index in India is trading at a P/E multiple of 40x or higher.
This amount does not include losses suffered indirectly through investment in mutual funds (MFs) and insurance companies.
BSE-listed companies' market capitalisation reached Rs 197.7 trillion on January 21, against India's nominal GDP of Rs 190 trillion during 12 months ended December 2020.
India's top IT companies have shown a hiatus between their performance on the bourses in the pandemic period and earnings growth. The combined market cap of the top five IT companies - Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra - is up 87 per cent since the end of March 2020. In comparison, the benchmark BSE Sensex is up 68 per cent during the period. So the industry beat the broader market by a big margin in the last one year.
After Maharashtra, analysts expect more states like Karnataka and Haryana to slash stamp duty rates. However, analysts, do caution that it's still a long road to recovery for the realty sector.
Though most analysts expect the global central banks to keep the liquidity tap open, valuations of Indian markets, they say, are beginning to look stretched. Against this backdrop, they remain cautious, with some even expecting a minor correction from here on.
In three of the past four years, 10-year returns have been 10 per cent or lower, making equity unattractive, compared to other asset classes.
Emerging markets such as India have always run higher inflation rates than developed economies such as the US and countries of Western Europe. But for the first time in the past 30 years, the US reported a higher consumer price inflation (CPI) rate than India in five consecutive months. The US reported a CPI rate of 7.5 per cent in January 2022 against 6.01 per cent in India and analysts expect the trend to continue for at least a few months more
Rs 1,000 now buys $13.5 against $14 a year ago.
Not surprisingly, equity investors are bidding-up stock prices across sectors and the broader market is now more valuable than pre-Covid levels.
Experts point to the higher contribution of rural from the north for the growth reported by the region, a point endorsed by companies who've been pushing their presence aggressively there.
FMCG has been behaving unlike a defensive category in recent quarters.
The Sensex is on course to ending calendar year (CY) 2019 at a price-earnings (P/E) multiple of 29x, the highest in 25 years. Current valuations are, however, lower than those seen in the early 1990s. The Sensex has risen close to 14 per cent in the last 12 months, while the index underlying EPS dropped 6.7 per cent during the period.
India Inc's cash pile was up 13.8 per cent last fiscal year, thanks to a combination of higher profits in sectors such as IT and fund raising by top companies such a Reliance Industries, Bharti Airtel and Tata Motors, among others.
It is the fundamentals of companies that will drive stock performance.
The markets will be eyeing the amendments.
India's cash-rich promoters are not the same as the wealthiest. For example, Mukesh Ambani is the richest Indian based on his stake in Reliance Industries, followed by Premji, the Adani family of the Adani group, and Radhakishan Damani of Avenue Supermarts.
BSE PSU index rallies 10% in one month; nearly a third of the stocks on the index has gained 20% over the period
Combined net profit of BSE500 companies at $ 63 bn is 2.3% of GDP; global average is 5%.
The combined interest payment for India's top listed companies, excluding financial and oil and gas firms, was up 15.2 per cent year-on-year during the six months ended March 2019, outpacing the change in net sales and operating profit.
So far in 2017, the Nifty has gone up by 22.4 per cent.
Analysts expect inflation to peak in the first half of 2016-17 and moderate, thereafter, on the back of positive impact of monsoons
Softening rural consumption and the likelihood of weak corporate earnings in the March quarter saw investors dump stocks.
The current valuation is 38 per cent higher than the 10-year average of 22x and over 50 per cent higher than the 20-year average of around 20x.
'If an investor wants to clone an ace investor's portfolio, s/he will be better off cloning the entire portfolio rather than cherry picking stocks selectively.'
Second-tier NBFC stocks are trading at 24.4x their trailing earnings, which is nearly twice their 15-year average of 13.9x
Investor Rakesh Jhunjhunwala and his family's net worth in listed companies surges in the recent bull run.
Experts say going ahead data price will fall further due to competition
A weaker rupee could aid corporate earnings through its positive impact on export intensive sectors such as information technology services, pharmaceuticals and commodity producers such as metal and mining, and oil and gas companies.
Using buyback as a divestment tool is not new, the amount raised this year is phenomenally high.
The bourse's valuations may get a boost, as it gets set for its OFS of about Rs 10,000 crore.
