2013 (excluding exceptional gains that were registered in the same quarter last year). While the numbers were better than market expectations, they still will end up pulling down the aggregate growth numbers posted by the 28 companies.
Projections by Brokerage houses
Even projections by brokerage houses for this quarter performance shows that the growth shown by the 28 companies may not be maintainable as more and more companies announce their result. Edelweiss projected a revenue growth of 11.8 per cent for 174 companies that it covers (does not include oil marketing companies) and a net profit growth of 4.4 per cent.
For the Sensex companies (excluding oil marketing companies), the revenue and profit growth has been projected at 12.4 and 6.6 per cent. The report pointed out that numbers are better than those seen in previous quarter and is on the back of better numbers from the IT and pharma sector.
Prabhudas Liladhar too projected a revenue growth of 10.4 per cent for Nifty companies (excluding oil and gas) and a growth of 5.3 per cent in profits for them.
Edelweiss report said that the entire benefit of topline improvement will not flow to the bottomline because of rise in input costs and interest payments increase. It further noted that banks and infrastructure companies may disappoint on numbers for the quarter.
“Owing to spike in wholesale rates and rise in bond yields, PAT of banks is expected to decline due to investment depreciation on G-Secs and lower treasury profits. Also, infrastructure related sectors viz., cement, construction and capital goods, are expected to post negative topline growth and their PAT (profit after tax) is estimated to plummet between 20 and 80 per cent year-on-year,” said the report.
Why are markets rising?
As the results for the quarter ended September 2013 continue to trickle in, stock markets have held themselves. And on Friday, the benchmark Sensex at the Bombay Stock Exchange witnessed a strong rally of 2.3 per cent or 467 points to close at a near three-year high of 20,882.9.
IT stocks have a weightage of 18 per cent in the Sensex and a rise in IT stocks over the last few days have certainly had an impact on the overall gains in Sensex.
“Several factors are working. While IT performance is having its impact, the banking sector has also gained with improvement in liquidity conditions. Also postponement of tapering of quantitative easing programme by US has