Dalal Street

The earnings season looked tepid – but the headline numbers hide the underlying strength. For example, excluding ONGC, Bharti and RCom, Sensex earnings were up 36%, its best performance in four years. The quality of earnings was also quite strong – net financial income’s share in pre-tax earnings fell to a near 8-year low.

Earnings growth in the broad market (3,038 companies) slowed down (as expected), though it was particularly damaged by the
energy sector (ex-energy growth was at 22%). Earnings at the aggregate level appeared to be in line with expectations — though (more…)

We are in a situation where earnings risk and valuation risk seem to be prevailing simultaneously. Large cap stocks in most sectors appear fully valued and the market is trading close to top of its trading range. Simultaneously, Sensex EPS estimates have declined 2-3% during the recent quarterly result season.

The narrow market (i.e., BSE Sensex) is lagging the broad market on profit growth. Slightly more than half of the reported companies (more…)

The Indian Equity market has reacted nonchalantly to a tepid earnings season, especially with the larger companies tending to disappoint on earnings. While inflation is a concern, the market seems to hold the view that the pressures will recede, and hence that India’s premium multiples will continue.

Morgan Stanley has crunched some historical data and come up with the theory of – Value at Risk. (VAR) – represents the weekly (more…)