The earnings season for the fourth quarter of fiscal year 2012 has almost come to an end. And we must say that the end was disappointing. Approximately 3,000 odd companies that have declared their results so far have seen their profits decline. Higher interest rates, volatile commodity prices and weakening rupee have impacted the profitability of India Inc. The sales growth too came under the scanner during the quarter. It may be noted that for the first time in many quarters, the sales growth fell below 20%. The growth in the quarter that went by was only 13%.
Reduction in sales growth is the factor that's most concerning. It indicates that both demand and output are dwindling. Until now, sectors like power, infrastructure and engineering were bearing the brunt of the slowdown. But it seems that in this quarter, consumer oriented industries have also been affected. Be it passenger cars, white goods or garments. Poor volumes from these segments indicate pressure on consumer spending. And consumer spending being the largest part of the economy, there are clear signs that the economic growth rate is under pressure.
But we know that the volatility in consumer spend is a temporary phenomenon. It should pick up since it is mostly non-discretionary in nature. Thus, to sustain/improve growth, everything boils down to how the government manages the three critical risks faced by the economy. One is Inflation. Second is volatility in raw material prices. And third, is the currency risk arising from weakening rupee. Volatility in raw material prices can't be tamed as they are dependent upon global demand and supply. However, government must take steps to curb inflationary pressures and tumbling rupee. Concrete steps are also needed to improve the deteriorating investment climate in the country. This will allow capital flow into critical sectors and improve investor confidence.
Right now, majority of the sectors like infrastructure, power, engineering and real estate are suffering from liquidity issues. Procedural delays faced by investors in these sectors act as a hindrance for capital infusion. Basically, the fear of risking/losing capital is keeping investors at bay. Thus, unless the government takes concrete steps to improve business confidence, next few quarters will be equally difficult for India Inc.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
Read the latest Market Commentary
What else is happening in the markets today? Dig in...
MRPL share price has hit a 52-week high. It is presently trading at Rs 45. BSE 500 Index is up by 1.7% at 19,713. Within the BSE 500, MRPL (up 8.3%) and RCF (up 20.0%) are among the top gainers, while top losers are HIMADRI SPECIALITY CHEMICAL and BHARTI AIRTEL.
KEC INTERNATIONAL share price is trading up by 5% and its current market price is Rs 454. The BSE CAPITAL GOODS is up by 1.6%. The top gainers in the BSE CAPITAL GOODS Index are KEC INTERNATIONAL (up 5.2%) and BHARAT ELECTRONICS (up 6.5%). The top losers are SCHAEFFLER INDIA (down 0.2%) and HINDUSTAN AERO. (down 0.3%).
GUJARAT ALKALIES share price is trading up by 10% and its current market price is Rs 346. The BSE 500 is up by 1.6%. The top gainers in the BSE 500 Index are GUJARAT ALKALIES (up 10.2%) and DEEPAK NITRITE (up 14.5%). The top losers are COLGATE and HDFC AMC .
DEEPAK NITRITE share price is trading up by 13% and its current market price is Rs 1,553. The BSE 500 is up by 1.4%. The top gainers in the BSE 500 Index are DEEPAK NITRITE (up 12.8%) and JUST DIAL (up 14.2%). The top losers are BAJAJ HOLDINGS & INVESTMENT and CADILA HEALTHCARE .
HIMADRI SPECIALITY CHEMICAL share price is trading down by 11% and its current market price is Rs 55. The BSE 500 is up by 1.4%. The top gainers in the BSE 500 Index are RCF (up 20.0%) and MMTC (up 20.0%). The top losers is HIMADRI SPECIALITY CHEMICAL (down 11.3%).
BSE Sensex is trading up by 378 points, while the NSE Nifty is trading up by 165 points.
View More Indian Share Market NewsLast time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.
A look at what India's top equity mutual funds bought and sold in January 2021.
Do you enjoy reading Tesla and Bitcoin stories? Here's a not so famous small-cap stock to profit from the rise of EVs.
In this video, I'll show you how to get started on the path to daily trading profits.
More
Equitymaster requests your view! Post a comment on "A 4QFY12 earnings review". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!