Banking and financial sectors seems have outperformed in this Results Season

by Libord Group One-stop Financial Services

Market experts believe that the automotive sector goes through cycles of ups and downs. Currently, during the quarterly earnings season, they see a mix of positive and negative results. However, one encouraging factor is that there are signs of an increase in capital expenditure (capex) in the industry. Many industrial companies have reported strong orderbooks, which means they have a good number of orders in hand, providing clear visibility of future earnings. They also mention that several companies in the consumer sector have indicated that their profit margins have reached their lowest point and are expected to improve in the first half of the financial year 2024. They are optimistic about sectors such as financials (companies related to banking and financial services), industrials (companies involved in manufacturing and infrastructure), consumer discretionary (companies manufacturing non-essential goods), and export-oriented sectors like chemicals. In simpler terms, they believe these sectors have good potential for growth and investment.

Experts view on corporate action: During the recent period of companies reporting their earnings, according to market experts, overall results have been as expected by the market. However, there have been significant differences in performance across different industries. Sectors such as banking, financial services, and insurance (BFSI), automobile, oil, and industrial sectors have reported positive financial results. On the other hand, the information technology (IT), fast-moving consumer goods (FMCG), and consumer discretionary sectors have shown weaker earnings. Banks within the BFSI sector have been standout performers, with many of them experiencing an increase in profit margins and improvements in the quality of their assets.

Experts on management commentary and March earnings: During the recent period of companies reporting their earnings according to market experts, overall results have been as expected by the market. However, there have been significant differences in performance across different industries. Sectors such as banking, financial services, and insurance (BFSI), automobile, oil, and industrial sectors have reported positive financial results. On the other hand, the information technology (IT), fast-moving consumer goods (FMCG), and consumer discretionary sectors have shown weaker earnings. Banks within the BFSI sector have been standout performers, with many of them experiencing an increase in profit margins and improvements in the quality of their assets.

Experts view on the current earnings season: Market experts are expressing a concern about not being able to predict or see clearly when the demand for products and services will recover, particularly from consumers. This lack of visibility or uncertainty is also affecting the information technology (IT) sector, which is worried about not being able to anticipate how much demand there will be for their products and services soon. This uncertainty is caused by the instability in the global banking sector and the delay in people spending money on non-essential IT products and services.

Experts view on quarter-end earnings results from the auto sector: Market experts say that the automotive industry goes through cycles of ups and downs. Currently, the passenger vehicle (PV) segment, which includes cars, has recovered from the impact of the COVID-19 pandemic and is performing well. On the other hand, the two-wheeler market, especially the smaller bikes below 110 cc, is still facing a slowdown. Additionally, due to geopolitical issues, the export of two-wheelers is also being negatively affected. In the case of commercial vehicles (CV), like trucks and buses, their market conditions also follow cyclical patterns. Currently, the CV segment is experiencing an upturn, meaning it is performing better. However, predicting the future of the CV industry over the next 2-3 years is challenging because it can be unpredictable and subject to changes.

Experts view on upcoming RBI policy: Market experts say that the Reserve Bank of India (RBI) has decided not to make any changes to interest rates in their most recent policy meeting. It indicates that the RBI will make decisions regarding interest rates based on the information they gather about economic growth and inflation. However, they suggest that interest rates have already reached their highest point and are not expected to increase further for now.

Experts View on Quick Service Restaurants and Staples: The market expert said that both the staples (essential goods like food, beverages, and household items) and quick-service restaurant (fast-food) sectors are currently experiencing a decline in customer demand because prices are increasing (inflation). However, this decline is expected to be temporary, and it is anticipated that demand will bounce back in the second half of the fiscal year 2024, especially during the festive season. In the short term, although there may not be much growth in the quantity of goods sold, businesses in these sectors are expected to improve their profit margins, which will help their overall earnings. Looking at the longer term, both sectors are predicted to perform well. The quick-service restaurant industry has significant room for growth in the country because it has not fully expanded its market presence yet. This means there is a lot of potential for these restaurants to reach more customers and expand their business. In the staples sector, the key driver of growth is expected to be offering premium or high-quality products that consumers are willing to pay more for.

Experts’ views on sectors for investments: The market experts are optimistic about certain sectors of the economy. They believe that the financial sector (such as banks and investment companies), industrials (which include companies involved in manufacturing and infrastructure), consumer discretionary (such as retail and entertainment), and export-oriented sectors like chemicals are likely to do well in the future. They believe these sectors will see growth and potentially offer good investment opportunities.

Conclusion: As we are nearing the end of the quarter earning results season, we have observed that the banking sector's results have outperformed themselves, as it was the only sector that has outperformed and met the expectations of investors. They also believe that the automotive sector goes through cycles of ups and downs. Currently, during the quarterly earnings season, they see a mix of positive and negative results. However, one encouraging factor is that there are signs of an increase in capital expenditure (capex) in the industry. So, they suggest investing in sectors like the financial sector (such as banks and investment companies), industrials (which include companies involved in manufacturing and infrastructure), consumer discretionary (such as retail and entertainment), and export-oriented sectors like chemicals, which are likely to do well in the future. They believe these sectors will see growth and potentially offer good investment opportunities. So open your demat and trading accounts with Libord Group and start investing in markets, as for the past few weeks we have seen markets giving great returns.