This is how muted India Inc earnings, US rating downgrade are impacting the stock market
Tata Motors, which had huge losses in the last year’s Q1, the growth normalizes to 20%, which is good enough. However, some recent blue-chip numbers from FMCG, Cement, IT, and Banks are below par, leading to a downgrade in future earnings. However, we need to notice that the total scenario is good, including the mid and small caps.
The earnings growth of 300 stocks was estimated to be around +30% (Bloomberg), and the actual figures to date are slightly better than expected. The recent downgrades of large caps increased the downfall when the global marketturned cautious too. The fall was higher in sector such as Reality, PSU Bank, FMCG, MNCs, Banks and Auto.
However, we don’t foresee this impacting the market in the future, as monthly high-frequency data suggests Q2 economy activities are robust. The sectors that are affected today by high raw material costs will be reversed in the Q2 results. The influx of demand, coupled with subsiding raw material costs, points to robust earnings growth in the coming period.
In July, GST revenue reached a significant milestone, nearing record highs, while the service PMI achieved a 13-year record high of 62.3, Manufacturing PMI reached a high of 57.7, and Auto Sales registered a remarkable 7% MoM growth. And the activities are expected to stay buoyant as festival season starts from August. Frankly, the US rating downgrade by Fitch is not a big surprise.
It was an inevitable to happen, though it took a lot of time and got astonishments from US officials & others. Standard & Poor had downgraded the US credit rating from AAA to AA+, twelve years earlier, in 2011. Fitch's implicit downgrade is justified by a consistent deterioration in debt-limit resolution governance, forecasts of a
. Read more on livemint.com
