IIFL says buy shares of companies with strong earnings momentum; top bets

By: | Updated: February 22, 2018 4:11 PM

Even as we come to the end of earnings season, wherein India Inc reported better than expected earnings in the quarter ended December-17, Ashutosh Datar, Equity Strategist at IIFL Institutional Equities says advises investors to focus on companies with strong earnings momentum.

Ridham Desai of Morgan Stanley said that improving revenue and breadth is a key positive in the quarter ended December-17. (Image: Reuters)

Even as we come to the end of earnings season, wherein India Inc reported better than expected earnings in the quarter ended December-17, Ashutosh Datar, Equity Strategist at IIFL Institutional Equities says advises investors to focus on companies with strong earnings momentum. In the quarter gone by the earnings in general had been In a recent interview, Ridham Desai of Morgan Stanley said that improving revenue and breadth is a key positive in the quarter ended December-17.

A recent Bloomberg report noted that more than three-fourths of the blue-chip companies in India’s Nifty-50 Index have reported results that either were in line or better than analyst estimates in the Sep-Dec-17 quarter. According to Ridham Desai, the earnings growth momentum faded towards the end. However, underlining a key positive, Ridham Desai noted that the revenue growth and momentum has remained strong across companies.

Sharing how to trade in the current markets, Ashutosh Datar says that he is underweight on the financials. The expert said that valuations seem to have caught up in some of the IT companies. Nilesh Shah, MD, Kotak Mahindra AMC told CNBC TV18 that he expects 2018 to be a volatile year for the stock markets. According to the expert, uptrend in corporate results and clarity on 2019 elections verdict will decide the course of markets.

In an recent interview to FE Online, Alok Singh of BOI AXA Mutual Fund said that with the ongoing stock market correction the overall valuations in the market have become quite reasonable. Further, the Q3 result season so far has  been quite encouraging which further makes the market more reasonable. “We continue to believe that midcap will be able to outperform large cap in the long run,” Alok Singh said.

Notably, ace banker uday Kotak said in an interview to CNBC TV18 that he’s glad that the markets have corrected since January. Earlier, in a letter to employees in January, Kotak had warned about investor over-exuberance in the domestic stock markets, with epcific emphasis on smallcap and midcap stocks.

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