If you are an investor, it may be a good time to relook at the stock market again. India Inc has registered robust growth for the just concluded March quarter. The momentum is expected to continue over the next couple of years.
Some brokerages expect the top Indian companies to record profits of over 20 per cent over the next two years. The sectors that are expected to perform well in terms of profit growth over the near future include banking and metals.
In a note on the fourth quarter results, brokerage house JP Morgan says that the 30 companies forming the BSE Sensex have seen a 21 per cent jump in profits compared to the last year. This was largely in line with expectations, notes the brokerage. However, rising prices and increasing competition is affecting margins of companies, says the brokerage.
Part of the strong financials for the fourth quarter are explained by the low numbers for Q4 of FY09, says Motilal Oswal, in a note. Metals and engineering sectors recorded a stronger than expected growth, the brokerage notes, while realty and oil & gas sectors came out with disappointing numbers.
Going forward, the momentum seems likely to sustain. Motilal Oswal expects a compounded growth of 28 per cent in the earnings of the Sensex companies over the next two years. The banking sector is likely to witness strong loan growth in the coming year, according to MOSL. Another sector likely to do well in the coming year is metals.
JP Morgan too has identified these two sectors as those likely to see the biggest jump in profits over the next few quarters. JPM expects the Sensex companies to record a 28 per cent jump in profits during FY11.