Index Outlook: Remain constructive on corporate earnings cycle - ICICI Direct

Global as well as Indian equity markets have been quite volatile in the recent past, primarily tracking inflation led interest rate hike outlook by global central banks, geopolitical tensions and rise in crude prices. Corporate earnings, a true barometer of the health of the market, on the other hand, have been quite resilient with growth momentum continuing unabated. At Nifty index level, on QoQ basis, sales, PAT growth for Q3FY22 is pegged at 11%, 9% respectively. On YoY basis, growth is even more stupendous at 25%+ each tracking commodity price led benefits in metals and oil & gas space. The management commentary is optimistic and hopeful of a strong rebound, going forward. Other macroeconomic indicators viz. GST collection, e-way bill generation, advance tax collection, etc, also point to better-than-expected economic rebound. With growth capex on the anvil by the public and private sector, we expect a broad based economic recovery, going forward. The shot in the arm is the capital expenditure outlay in Union Budget 2022-23 (| 7.5 lakh crore, up 35% YoY) that is expected to have multiplier effect across the domestic economy. We believe that the present market volatility offers an opportunity to build long term portfolio of quality companies, which have lean b/s, are capital efficient & have growth longevity.

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Source : Equity Bulls

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