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.
Companies in the small-cap universe are having a dream run - the Nifty Smallcap 100 index has shot up more than 25 per cent on a year-to-date basis, even as the benchmark Nifty is up 7 per cent. This is the best start for the index since 2017 when the Nifty Smallcap 100 index surged 32.3 per cent between January 1 and May 10. However, in terms of outperformance to the Nifty, this year's performance is the best in more than a decade. A combination of sectoral tailwinds and lack of institutional selling pressure has helped small companies escape from the correction triggered by the second wave of Covid-19.
The Indian rupee is down nearly 2 per cent against the US dollar since the beginning of January 2019. Experts attribute the Indian rupee's relatively poor performance to a sharper-than-expected fall in economic growth in India.
Valued at $71.2 billion, the bank's market capitalisation is more than that of global banks like Barclays, JP Morgan Chase and Credit Suisse.
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.
sharper-than-expected economic recovery back home, analysts say, can fuel a further rally in domestic cyclicals, industrials, and financials as global central banks continue with their easy money policy.
The divestment process, however, will not be an easy affair as there are multiple stakeholders, including the employee unions, whose concerns will have to be addressed.
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.
Analysts attribute this withdrawal trend to the nervousness ahead of US presidential elections and the fact that the markets raced ahead even as the economic recovery remained fragile back home.
Auto companies are now grappling with a slowdown in sales, triggered by pent up demand due to the COVID-led lockdown easing a bit and supply-side issues for raw material.
Analysts, however, suggest investors remain selective on realty stocks and buy only where there is revenue visibility and a credible promoter backing.
Analysts expect firms to shift focus to online platforms to boost sales in these Covid-19-impacted times.
There will be pressure on the fiscal situation, especially at a time when the monsoon can also disappoint. More populist expenditure is on cards if the mandate is a hung Parliament or a coalition government.
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.
Analysts attribute this fall to the recent moderation in energy (mainly crude oil) and commodity prices, lowering of input costs for companies in sectors such as FMCG, consumer durables, and automobiles, reports Krishna Kant.
Analysts attribute the surge to a host of factors, particularly the interest shown by the retail investors in these two market segments.
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.
There is positive correlation between crude oil prices and Indian equities and investors can expect more upside after the recent rally in Brent crude price.
A weak economy coupled with rising Covid-19 cases and inflation that is above RBI's comfort zone, geopolitical developments, and upcoming India Inc's second quarter results for FY21 could impact sentiment, analysts say.
What worked for the markets was favourable global investor sentiment and encouraging flows into the emerging markets following stimulus measures taken by central banks.
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.
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 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.
Further outperformance hinges on pickup in industrial activity, buying by local investors.
Not surprisingly, equity investors are bidding-up stock prices across sectors and the broader market is now more valuable than pre-Covid levels.
The S&P BSE Small-cap index has recovered 26 per cent as compared to a 23 per cent rise in the S&P BSE Sensex.
Since UK referendum outcome to exit European Union last Friday, 32 companies have hit record highs.
The Karnataka election is being seen as the semi-final to the 2019 general elections and appears to be heading towards a close fight
Most analysts as well as company executives say the rally in commodity prices is ill-timed coming just when firms were recovering from disruptions such as demonetisation & introduction of GST
The trend in corporate earnings suggests that index earnings could fall to the levels last seen in early 2014.
'The recent price hike would only be beneficial if the airlines continue to operate at 80 per cent airline capacity. An increase towards 90 or 100 per cent airline capacity would again add pressure to the fares as demand remains muted. Also, we are in the fourth quarter of the fiscal year which is a seasonally weaker quarter,' says an analyst.
BJP loss could trigger a correction
Though most experts remain bullish on the banking space, they suggest investors buy only those banks whose NPAs are at a manageable level of 3% to 4% and there is credit growth or earnings visibility.
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.
Their share in overall market capitalisation of BSE stocks has risen to a four-year high
Puneet Wadhwa and Debashish Pachal locate real estate stocks to watch out for.
While companies have not launched too many products in rural areas of late, easy financing has helped push up demand.
Gold, which was hovering around $1,321 an ounce in January 2019, has already breached $1,600 per ounce in the past few sessions to a seven-year high.
In the past two months alone, four companies have garnered a cumulative Rs 22,400 crore via this route.
The firm would require it to more than triple its CAGR of revenue to 18.5% for the next decade from 6%
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