Analysts’ Take On India Inc.’s Q3 Results And Market Outlook

Analysts from BofA Securities and Nomura see near-term risks for Indian equities that may lead to a consolidation in the market.

Rising commodity prices, bond yields and a surge in Covid-19 cases in some parts of the country are some of the key risks highlighted by the research firms in their notes. “With the Nifty already at our year-end target of 15,000, continuation of a broad-based market rally appears unlikely,” BofA Securities said.

According to Nomura, a rise in trade and current account deficit, too, is a cause of concern.

Indian equities have rebounded nearly twofold from their March-low triggered by the pandemic as the lockdown curbs were lifted, foreign investors pumped money, hopes of a Covid-19 vaccine and improving corporate earnings.

Most Nifty 50 companies either met or beat estimates in the quarter ended December. The average Ebitda margin of 39 of the 50 constituents in the Nifty—excluding banking, financial and insurance companies—expanded to 25.02% in the October-December period from 21.94% a year ago. That, according to a Yes Securities report, is due to higher realisation on sales, effective cost management, and improving economies of scale supporting Ebitda growth.

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