The earnings season this time around is under the microscope. The reason is that it is being compared with the earnings of 1QFY21 which was marred on account of the national lockdown. And this examination has revealed that the results of the corporate sector across several verticals have not been as negatively impacted as they were during the first national lockdown. The conclusion is that corporate India has emerged much sharper and efficient post the second wave of the deadly virus attack. Overall then, the markets have offered much to cheer just as the haul of medals at the Olympics has ushered in a rejoicing spirit in the Indians.
Winners and Losers
The positive earnings reported so far have kept the bulls in action as these along with liquidity are the only triggers holding the markets at higher levels along with some positive macroeconomic data. Going by the management commentary so far, it is clear that the negative impact of partial lockdowns in the recent wave was minimal and did not deter companies from delivering growth. One of the trends that clearly emerged is a reduction in margins owing to the rise in raw material costs with the increase in commodity prices. The Indian IT sector companies witnessed one of the best quarters in many years this season. The outperformance of mid-tier IT companies was visible even as the new deal win momentum remained robust following the increase in demand for cloud migration and digital transformation.
This story is from the August 16, 2021 edition of Dalal Street Investment Journal.
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This story is from the August 16, 2021 edition of Dalal Street Investment Journal.
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