Analysts at HSBC say that while a global recession might put a lid on the Indian market’s rally in the near future, a sharp downturn in equities is unlikely.
What Happened? The Indian stock market has been on a hot streak lately, powered by overseas investors and better valuations. The Nifty50 has so far gained close to 10% since hitting a year-to-date low on March 28.
HSBC said that the trajectory of earnings will be critical and anticipates a robust 19.2% year-on-year growth for the Nifty 50 index in FY24 based on the strong earnings performance by companies in Q4 FY23.
Analysts said that of the more than 135 companies under their radar, 93 have already disclosed their earnings. Sales figures have mostly met expectations, with 44% of companies surpassing HSBC’s earnings estimates, while 27% have fallen short.
The banking, non-banking financial companies (NBFCs), automotive, and fast-moving consumer goods (FMCG) sectors have delivered solid performances, exceeding earnings expectations.
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However, results from the country’s information technology have been a mixed bag of results, while the insurance and basic materials industries have mostly disappointed.
Overall, the fourth quarter of FY23 saw an average year-on-year increase of 16% in sales, accompanied by a robust 17% rise in EBITDA and a 31.6% surge in profit after tax, the analysts said.
HSBC maintained an optimistic outlook for the market, noting a positive shift in momentum after a slow start to the year.
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