Moneycontrol Bureau
Brokerage house Morgan Stanley feels that inventory losses because of the steep fall in crude oil prices could distort the aggregate corporate earnings picture for the December quarter.
“In the ongoing quarter, several companies might suffer from inventory losses given the swing in oil and oil related commodity prices and hence headline numbers which get reported in January/February may be misleading,” says the brokerage in its note to clients.
“The earnings revisions breadth is still in the negative zone but consensus has lifted its 2-year forward earnings CAGR by about half a point (0.5 percentage point) over the past three months. The market may be more focused on guidance for the coming quarters which thus far has remained tepid,” the note says.
The brokerage expects a repeat of the volatility seen last month, in the current quarter.
“In our view, the market's bout of volatility in December is unlikely to subside in the current quarter which is likely news heavy with global developments around oil, US yields, Fed policy, global growth data, domestic news flow especially the Union budget, RBI policy and impending legislation like the GST bill and the upcoming earnings season (expectations appear muted) as sources of potential market volatility,” the Morgan note says.
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