Market-wary analysts look at poor Q3, Q4 results

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Mumbai: the Sensex, has also eroded Sensex FY2010E earnings per share numbers. This is due to the pressure on GRMs and poor spreads in the petrochemical business. The RIL downgrade has cost the Sensex almost 30% of the downgrade of FY2010 estimates by Angel Broking.

Other sectors that have been responsible for the lowering of Sensex earnings growth are the automobile and IT sectors, says Angel Broking.

In the coming quarter banking and oil & gas, the two biggest contributors to earnings, would account for 42% of earnings, while they would contribute only 15.6% to earnings growth. Strongest earnings growth would be delivered by Banking, IT and Engineering, while highest earnings de-growth would be reported by metals, autos and real estate, says the Motilal Oswal Securities report.

However, even if the market tanks all is not lost. Nilesh Shah, DMD and CIO with Prudential ICICI AMC says, “The fact that earnings will be lower is already in the market. In case there is any correction, it would not be steep. The current rate cuts carried out by the central bank and the fiscal stimulus would provide a support for the markets at the lower end.”

Religare Hichens Harrison analysts have maintained their Sensex range of 8,000–12,000 for 2009 and their Sensex EPS of Rs 864 for FY09 (2.9% growth) and Rs 952 for FY10 (10.2% growth).