Do it yourself

I find the following four narratives are presently dominating the financial market research in India: (1)   Slowing economic growth India's economic growth hit a six-year low of 5% in 1QFY20. The consensus estimates indicate that the growth may further slip even to below 5% in 2QFY20. Some estimates are forecasting that the 2QFY20 GDP growth, to be announced next week, may be closer to 4% rather than 5%. The full year growth number, after accounting for base effect and recovery in 2HFY20, are also expected to remain closer to 5% rather than 6%. The slowdown in economic growth is widespread, encompassing all the segments and sectors of the economy. Agriculture, industry and services have all slowed down. Investment and consumption demand is multiyear low; and so are savings, investments and credit growth. The financial research is adequately capturing the slowdown since August when 1QFY20 GDP growth numbers were announced. However there are still differe...

The latest results season has started on a somber note. Both the IT bell weather TCS and Infosys have highlighted the challenges persisting in the operating environment. Though the 2QFY20 saw divergent performance for both the leading companies, the guidance for near future underlined the growth challenges. The quarterly performance has to be evaluated with the backdrop of already muted expectations and earnings downgrades post 1QFY20 results. Some key points of 2QFY20 results forecast by brokerages could be summarized as follows: Expect profit before tax (PBT) for the KIE coverage universe to decline by 4.6% yoy in 2QFY20, led by a yoy decline in PBT in the following sectors: (1) automobiles (lower sales volumes and margin compression due to increase in discounts), (2) metals & mining (sluggish demand, weak realizations and volumes on a yoy basis), (3) oil, gas & consumable fuels (dragged by decline in volume growth for Coal India and lower net crude rea...