India’s macros are a concern even as the country’s most popular stock benchmark touched a fresh all-time high. That’s according to brokerage CLSA’s India Strategist, Mahesh Nandurkar.
The S&P BSE Sensex climbed 1.2 percent to 36,699.53 driven by refining stocks, as a decline in crude oil prices lowered their costs.
The optimism was also fuelled by the promising start to the first-quarter earnings season with Sensex members Tata Consultancy Services Ltd. and IndusInd Bank Ltd. reporting a good set of numbers. While the private lender reported stable asset quality, India's largest software exporter's profit grew more than 6 percent.
India Inc.'s earnings will grow by 18-20 percent in the first quarter of the current financial year, according to Nandurkar, after several quarters of muted growth.
“We are expecting more than 20 percent earnings growth for the [pharma] sector.”
Here are the key highlights from the conversation and CLSA’s report.
- Seeing improvement in corporate earnings.
- Good earnings expected from auto, consumer and media sectors.
- Earnings decline expected for telecom and cement.
- IT and pharmaceutical sectors likely to benefit from forex tailwinds.
- Bullish on pharmaceutical and healthcare stocks with a double overweight rating.
- Believe real estate has bottomed out and should improve in second half of FY19.
- Expect financials to report weak numbers, around 90 percent earnings declined, year-on-year.
- Oil public sector units’ profits likely to double, YoY.
- Expect Bharti Airtel Ltd. and Idea Cellular Ltd. to report loss.
- Expect profit decline for Adani Ports & SEZ Ltd. due to market-to-market loss on foreign debt.
- Profit for cement companies expected to decline 37 percent, YoY.
- Short duration debt markets look more attractive.
- Would not rule out 10-year yield touching 8 percent.
- Expect more than one rate hike this year.
- Have seen some slowdown in domestic inflows.
- Emerging market funds seeing some outflows including from India.
- Large-cap stocks have been the point of attraction for FIIs.
- Expect another two to four rate hikes by the U.S. Federal Reserve over the next 12-18 months.
- Valuation of tobacco stocks looks attractive.
- Evidence of revival in U.S. BFSI space positive for IT companies.
- Maintain neutral stance on IT.