MC Market Poll: Earnings remain a major concern for Indian equities, followed by valuations, deteriorating macros

Earnings remain a major concern for Indian equities, followed by valuations, deteriorating macros

While a mix of global and domestic headwinds are affecting markets globally including the Indian stock market, a majority of experts believe that earnings disappointment is the key risk for domestic equities.

The latest Moneycontrol Market Poll, which saw participation of nearly 45 respondents across categories including broking firms, mutual funds, AIFs, PMS and independent experts, also revealed that high valuations, deterioration in India's macros, global risks arising out of Donald Trump's policies and continued selling by foreign institutional investors also feature among the top risks.

Experts have already flagged a continued slowdown in earnings growth for the December quarter, though with a minor recovery from the previous quarter. The Q3 earnings season thus far has also landed right on expectations of weakness, with companies reporting weaker-than-expected numbers outnumbering those that met estimates.

Brokerages predict that top-line growth for listed firms will remain subdued for the seventh consecutive quarter. With this in the backdrop, it is highly likely that India Inc will deliver sub-10 percent profit growth for the third straight quarter, a first since the pandemic.

With this in the backdrop, it is highly likely that India Inc will deliver sub-10 percent profit growth for the third straight quarter, a first since the pandemic. Any favourable outlook in earnings will be a result of significant moves in terms of government interventions in capex, export incentives, and the broader economic climate.

BoFA Securities the slowdown in the secondary sector was the major driver behind the low growth print. "The government would want to press the peddle on extending the PLI (Production-Linked Incentive) schemes that have performed well and introduce new incentives on this front," the research firm wrote in a note.

Meanwhile, 67 percent respondents said that they do not expect FPIs to be net sellers in CY25. Incidentally, FIIs are already net sellers in excess of $6 billion in the current month with last year’s net buying pegged at a paltry $124 million.