Earnings estimates for Indian companies could be slashed by nearly 40 per cent this fiscal year and next due to a host of global and domestic risks, according to Bank of America Corp.
Consensus estimates for NSE Nifty 50 companies are lofty and haven’t moderated despite a weak outlook for software firms, wrote analyst Amish Shah in a note Thursday.
Estimates for the 2024 and 2025 fiscal years may be slashed to 11 per cent and 9 per cent respectively from 17 per cent and 16 per cent as the March quarter earnings season gets underway, he added.
Demand in India’s urban areas is expected to peak and revival in rural parts remains slow, according to Shah. Weakening global growth and volatile commodities add to the bleak outlook for corporate earnings.
“We see no upside to our Nifty year-end target of 18k; would look to book profits,” the note said. In March, the bank suggested buying local shares on dips as the Nifty index dropped below 17,000 to briefly enter a correction.
On Thursday, Sensex and the Nifty resumed their upward march on gains led by banking and financial heavyweights, such as HDFC twins, Bajaj Finance and SBI even as global cues were mixed after the US Fed raised rates on expected lines by 25 bps.
Sensex opened with a mild gain of 65 points at 61,258.13 and rose about 605 points intraday to 61,797.91. The index finally closed 556 points, or 0.91 per cent, higher at 61,749.25 while the Nifty closed the day with a gain of 166 points, or 0.92 per cent, at 18,255.80.
Shares of HDFC twins, Reliance Industries, Bajaj Finance, TCS and SBI remained the top contributors to the gains in the Sensex index.
Top gainers and losers in Nifty
Shares of Adani Enterprises (up 4.68 per cent), Bajaj Finance (up 3.22 per cent) and HDFC (up 2.66 per cent) ended as the top gainers in the Nifty index.
On the flip side, shares of IndusInd Bank (down 1.32 per cent), UPL (down 1.10 per cent) and Nestle (down 0.72 per cent) ended as the top losers in the Nifty index.
As many as 33 stocks ended in the green while 17 ended with losses in the Nifty index.
“The low of 18,042 made on May 3 should act as a crucial support level and as long as the Nifty manages to hold above this level it is likely to keep stretching higher. On the upside, the immediate hurdle lies at 18,350 – 18,370 where the weekly upper Bollinger band is placed. In terms of levels, 18,074 – 18,050 will act as a crucial support zone while 18,350 – 18,370 is the immediate hurdle zone,” said Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas.
(with inputs from agencies)
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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