Mixed Start to Local Earnings Keeps Indian Stocks Little Changed

(Bloomberg) -- Indian equities were little changed, giving up gains in early trade, as investors assessed local companies’ earnings. Four of the top 50 companies have reported quarterly results so far and two of them have beaten estimates.

The benchmark S&P BSE Sensex climbed less than 0.1 percent to 36,321.29 at the 3:30 p.m. close in Mumbai, giving up gains of as much as 0.4 percent in the day. The NSE Nifty 50 Index was little changed at 10,890.30.

A national election, along with a shrinking pool of cash as central banks across the world trim balance sheets, suggests 2019 will be challenging for Indian equities. Local flows are also showing signs of fatigue as stock funds received the smallest inflows in 23 months through December. Some analysts expect Indian equity gauges to remain in the doldrums until the poll results become clear, around May.

Mixed Start to Local Earnings Keeps Indian Stocks Little Changed

Strategist Views

  • “Markets have been trading in a narrow range, reflecting indecisiveness ahead of Indian elections,” said Jagannadham Thunuguntla, senior vice president and head of research for wealth at Centrum Broking Pvt. in Mumbai. “The ongoing earnings season is keeping investors busy with stock-specific action.”
  • Better-than-expected earnings growth will cushion the market, while challenges will arise with any weakening of the rupee against the dollar or a rebound of crude oil prices. He advises investors to pick shares of companies with low debt, wider profit margins and highest return ratios.
  • “Keep dry powder ready to take advantage of any volatility.”

The Numbers

  • Eleven of the 19 sector indexes compiled by BSE Ltd. advanced, paced by a gauge of oil and gas shares.
  • Indo Rama Synthetics India Ltd. climbed 5.7 percent to its highest since February 2018, after a unit of Indorama Ventures said it plans to buy a stake.
  • Speciality Restaurants Ltd. surged by its daily limit of 20 percent, a record, after its October to December sales jumped 24 percent from a year earlier and its net income rose nearly 13 times.
  • Of the four Nifty 50 companies that have reported earnings so far, two have topped analyst estimates and two have trailed, according to data compiled by Bloomberg.

Analyst Notes/Market-related Stories

  • UBS Says Investors Won’t Make Money on India Stocks in 2019
  • SBI Life Rated New Underperform at Macquarie; PT 555 Rupees
  • AIA Engineering Upgraded to Buy at Nomura; PT 1,945 Rupees

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