Indian companies' September-quarter profit growth is expected to accelerate even as performance is likely to be uneven across sectors due to global and local headwinds, according to five brokerages.
Foreign investors have pulled out of Indian stocks at a record pace, pushing the benchmark Nifty 50 towards its worst year in 15 years. While a weakest-in-a-decade monsoon has raised rural demand concerns, the Middle East conflict has fuelled inflation concerns globally, raising the risk premium on emerging market economies and equity markets.
However, "resilient domestic demand in Q2, early festive inventory build-up, favourable pricing in selective commodity-linked sectors should continue to support earnings growth," said J.P.Morgan analysts led by Rajiv Batra.
Nifty 50 firms' net profit is forecast to rise about 20% year-on-year on average, based on brokerage estimates. In April-June, it hit a 10-quarter high of 18% following three quarters of low-single-digit growth.
Motilal Oswal is the most optimistic, forecasting a 27% increase in net profit, which would be the fastest in 17 quarters.