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Of Analysis of Corporate Earnings, SIPs Showing Weak Trends and Top Stocks in Action Today
Fri, 18 May Pre-Open | Parth Parekh, TM Team

After rocket gains of 58% in calendar year 2017, BSE Smallcap Index is down 9% since the beginning of 2018. While corporate earnings remained depressed on account of disruptions by demonetization and goods and service tax, the sharp rally in 2017 was driven purely by expansion in the price/earnings (PE) multiples.

Rallies driven by PE expansion are not sustainable. Serious long-term investors should instead focus on a recovery in the corporate earnings. As Peter Lynch in his famous book 'One Up on Wall Street' quotes:

  • "If you can follow only one bit of data, follow the earnings-assuming the company in question has earnings. As you'll see in this text, I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities. What the stock price does today, tomorrow, or next week is only a distraction."

We too believe that in the long-run, share prices tend to move in the direction of the earnings growth. And the recent data on corporate earnings is giving mixed signals for the road ahead.

Performance of Different Sectors in the Quarter Ended March 2018
Sectors Performing WellSectors Showing Stress
AutomobilesCapital Goods
Source: Company data, BSE

After two years of depressed earnings, hopes of a trend reversal are high. However, one more quarter of depressed earnings could lead to a deep correction in the indices.

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Systematic Investments Plans (SIPs) Take a Hit in the month of April

Volatility in the stock markets, have led to retail investors going slow on their SIPs in the month of April. The SIP flow which peaked at Rs 7,119 crore in March 2018 have now slowed to Rs 6,690 in April 2018. This fall of Rs 420 crore is the highest as witnessed in two years.

Now many of these retail participants are first time investors who have not witnessed the markets fall in a bear market. In case of a hefty correction in the stock market, these first time investors could possibly exit their investments in panic, which could aggravate the market correction.

Top Stocks in Action Today

The stock of Bajaj Finance, Balkrishna Industries are expected to react in today's trade as they declared their quarterly results yesterday after market hours.

Further, stocks such as Amara Raja Batteries, Ashok Leyland, Inox Wind, Kitex, Poddar Housing, Thermax are expected to be in action today as they declare their results for the quarter ended March 2018.

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Stock Market Updates

CADILA HEALTHCARE surged by 5%; BSE HEALTHCARE Index Up 0.7% (Today's Market)

May 25, 2018 02:53 PM

CADILA HEALTHCARE share price has surged by 5% and its Current Market Price is Rs 377. The BSE HEALTHCARE is up by 0.70%. The top gainers in the BSE HEALTHCARE Index is CADILA HEALTHCARE (up 5.31%). The top losers are DR. REDDYS LAB (down 0.03%) and BLISS GVS PHARMA (down 0.05%).

KOTAK MAH. BANK at All Time High; BSE BANKEX Index Up 1.0% (Today's Market)

May 25, 2018 02:44 PM

KOTAK MAH. BANK share price has hit an all time high at Rs 1,307 (up 2.42%). The BSE BANKEX Index is up by 0.96%. Among the top gainers in the BSE BANKEX Index today are KOTAK MAH. BANK (up 2.42%) and HDFC BANK (up 1.34%). The top losers include ICICI BANK (down 0.12%) and SBI (down 0.95%).

RELIANCE POWER surged by 5%; BSE POWER Index Up 1.4% (Today's Market)

May 25, 2018 01:45 PM

RELIANCE POWER share price has surged by 5% and its Current Market Price is Rs 35. The BSE POWER is up by 1.42%. The top gainers in the BSE POWER Index are RELIANCE POWER (up 5.28%) and TORRENT POWER LTD (up 5.79%). The top losers is ABB INDIA LTD. (down 0.45%).

TATA POWER surged by 5%; BSE POWER Index Up 1.3% (Today's Market)

May 25, 2018 01:41 PM

TATA POWER share price has surged by 5% and its Current Market Price is Rs 81. The BSE POWER is up by 1.32%. The top gainers in the BSE POWER Index are TATA POWER (up 5.30%) and TORRENT POWER LTD (up 5.74%). The top losers is ABB INDIA LTD. (down 0.47%).

Indian Indices Continue Momentum; Energy and IT Stocks Witness Buying (Today's Market)

May 25, 2018 12:30 pm

The BSE Sensex is trading up by 160 points, while the NSE Nifty is trading up by 52 points.

ADANI POWER surged by 5%; BSE POWER Index Up 1.1% (Today's Market)

May 25, 2018 12:33 PM

ADANI POWER share price has surged by 5% and its Current Market Price is Rs 20. The BSE POWER is up by 1.11%. The top gainers in the BSE POWER Index is ADANI POWER (up 5.04%). The top losers are ABB INDIA LTD. (down 0.11%) and SUZLON ENERGY (down 0.44%).

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