Having propelled the benchmark gauge almost 10% this week in a budget-driven rally, stock bulls in India are now counting on earnings to be the catalyst for the next leg up.
The 34 NSE Nifty 50 Index members that have declared December-quarter results have posted a 34% jump in earnings from a year earlier, according to a note from local brokerage Kotak Securities Ltd. on Friday. With India’s daily new Covid-19 infections slowing and the vaccination drive gaining pace, analysts are betting on a stronger rebound in the economy and corporate profits in the months ahead.
“Everything is in place - macro, policy, global backdrop,” said Gautam Duggad, head of research at Motilal Oswal Financial Services Ltd. “The market now just needs one thing to keep rallying -- earnings.”
Rising optimism over earnings comes after the government unveiled a $500 billion spending plan in its budget on Feb. 1. That saw the benchmark Nifty 50 Index surge the most since April this week. The Reserve Bank of India raised its forecasts for economic growth on Friday, while assuring markets of ample liquidity to manage the government’s massive borrowing.
Pharma stocks have been among the top gainers, along with technology stocks, in the wake of the COVID-19 pandemic.
The sector was in focus in Union Budget 2021, with Finance Minister announcing an outlay of Rs 2,23,846 crore for health and well being.This was an increase of 137 percent compared to 2020 when the allocation stood at Rs 94,452 crore. The rise was primarily led by Rs 35,000 crore for COVID-19 vaccines. The finance minister also announced a new scheme called the PM Atmanirbhar Swasth Bharat Yojana for boosting primary, secondary, and tertiary healthcare, with a budgetary outlay of Rs 64,180 crore spread over six years. This funding would be used to develop capacities of the healthcare system, institutions for detection and cure of new and emerging diseases.
