ICICI Direct Special Report - Index Outlook: Earnings stage smart upgrade, further upside seen...

Indian markets have shown resilience in the recent past and scaled new highs amid encouraging corporate earnings in Q4FY21 led by the upswing in key commodities prices and strong underlying demand prospects. GST collection at ~Rs. 1.02 lakh crore for May 2021 (eighth consecutive month of >Rs. 1 lakh figure) is testimony to robust domestic macroeconomics. Going forward, with peak of the Covid resurgence behind us, increasing pace of vaccination domestically and calibrated state specific unlocking under way, we expect economic activity to bounce back sharply in 9MFY22E. Our view is further reinforced by the step up capex by the government, which will create multiplier effect on the economy. We expect the present broad-based up move in markets to continue, with small cap and midcaps leading the gains. We continue to like IT & pharma space as structural plays in the market.

Sectoral Earnings

Earnings in the oil & gas space were a saviour and lifted overall earnings at the index level for FY21. Going forward, double digit earnings growth over FY21-23E will be led by automobile sector (base effect), capital goods space and index heavy BFSI space, which also includes the insurance sector.

For details, click on the link below: Link to the report

Source : Equity Bulls

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