the revenue and profit expansion of the BSE 100 companies (excluding IOCL, BPCL and HPCL) over the last seven quarters. In the 21 month period, the net sales of these companies have grown by 33 per cent from Rs 4,03,006 crore in the quarter ended December 2010 to Rs 5,35,728 crore in September 2012. On the other hand, the net profit for these firms have expanded by only 17.5 per cent in this period from Rs 59,928 crore in Dec 2010 to Rs 70,454 crore in September 2012.
The way ahead
In the four month period between June and September 2012, the Sensex rose by almost 18 per cent and even crossed 19,000 on October 4, 2012 on the back of improved global environment, the quantitative easing (QE 3) announcement by the Federal Reserve and reform initiatives taken by the government on raising the diesel prices, its decision to allow FDI in multi brand retail, cabinet clearance of FDI in pension sector and hike in FDI limit in insurance and aviation sector. If all these provided the sentiment boost for the markets, the second quarter earnings failed to excite the bourses and over the last six weeks, the market has been rangebound and has simply not been able to break-out. Certain brokerage houses project that it will cross 20,000 by the calendar year-end.
So for the optimists, the fact that the declining growth trend of corporate profits is close to bottoming out, a rate cut is possibly round the corner and global liquidity is on a rise. Combined with this is the step-up in the government's reform agenda and expectations of continued positive measures on the fiscal, governance and investment fronts. All these augur well in terms of positive cues for the markets going forward, even though stock picks need to be made keeping in mind the current valuations, as many companies are trading at a significant premium. "We expect markets to remain volatile considering the global uncertainty and slowdown in the Indian economy. Retail investors should keep investing regularly rather than trying to time the market and should stick to