Markets at record closing high ahead of Q1 earnings
Premium- The BSE Sensex was up 193.58 points or 0.37% closing at 53,054.76. The Nifty gained 61.40 points or 0.39% at ended at 15,879.65.
The markets hit record closing on Wednesday ahead of March quarter corporate earnings that kickstarts tomorrow. Even as global equities were mostly weak and rising Brent crude prices is concerning, investors drew comfort from expectations of strong corporate earnings.
The BSE Sensex was up 193.58 points or 0.37% closing at 53,054.76. The Nifty gained 61.40 points or 0.39% at ended at 15,879.65.
Shares in Asia-Pacific region were mixed. While Shanghai composite in China rose 0.66%, Nikkei 225 in Japan and South Korea’s Kospi were down nearly 1%.
According to Binod Modi, Head Strategy at Reliance Securities, “Domestic equites remained resilient and shrugged-off weak global cues as persistent traction in financials continued to lend support to markets. Progress of monsoon, Q1FY22 corporate earnings and covid 19 positivity rates will be in focus in the near term."
He added that sharp rise in crude prices and strengthening dollar index have weighed on sentiments in recent weeks.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, “Investors today await outcome of FOMC meet on the global front while domestically, upcoming cabinet reshuffle of the central government would be the key event to watch out for. Further Q1FY22 earnings season would kick start from tomorrow with TCS results and would thus provide some direction to the market as it would offer cues with regards economic revival."
Following a turnaround in corporate earnings in financial year 2021, companies are expected to see steady growth in profitability in the first quarter of FY22. Even as few sectors suffered a setback due to localised lockdown, earnings momentum is expected to continue in April to June period, led by cyclicals while consumer-facing sectors may moderate somewhat, said analysts.
Rising commodity prices may crimp margins of few sectors while increase in employee costs for factors such as salary hike cycle and high attrition may hit margins of IT companies. Tata Consultancy Services will kick-start the April-June quarter earnings session by announcing its results on 8 July.
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Kotak Institutional Equities Research expects net profits for Sensex companies to increase 72% year-on-year but decline 3% sequentially and for the Nifty stocks to increase 127% y-o-y but 6% q-o-q. It estimate earnings per share (EPS) of Sensex at Rs2,303 for FY2022 and Rs2,631 for FY2023 and of the Nifty at Rs715 for FY2022 and Rs813 for FY2023 respectively.
Banks, capital goods, IT services, metals and mining, upstream oil, gas & consumable fuel companies are expected to lead earnings growth in Q1.
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