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.
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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.
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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