nifty: India Inc Q1 results: Nifty reports slowest revenue growth in 10 quarters but PAT gives adrenaline rush

nifty: India Inc Q1 results: Nifty reports slowest revenue growth in 10 quarters but PAT gives adrenaline rush

The earnings season for India Inc’s first quarter of FY24 wrapped up this week. Given the high base effect of the previous year’s June quarter, the revenue of Nifty 50 rose by 5% YoY in Q1FY24, representing the slowest growth in ten quarters.


On the other hand, the profitability witnessed an adrenaline rush, recording the highest yearly growth of 33% in six quarters. The companies have reaped benefits from the decline in input costs, resulting in the expansion of margins.

Nifty 50’s journey resembled a rollercoaster, with some sectors shining while others were disappointed.

Taking a closer look at India Inc’s sectoral performance during Q1FY24:



Once again walking away with top honors are the Banks and Automobiles sectors, exhibiting remarkable growth in revenue and profits. The Infrastructure sector posted an impressive profit growth of 157% YoY, thanks to the cooling raw material prices. The increasing economic activities in India will bring more investments into the sector ahead.

Talking about banks, it is now a known fact that the repo rates have peaked and thus there is negligible scope for Net Interest margins to improve from these levels. However, the latest RBI MPC meeting indicates that the rate cuts are farther than expected meaning the banks could enjoy higher rates on their loans for longer. Further, the Advances environment remains robust, and the continued reductions in credit costs would aid to offset the impact of margins on ROA. The business environment continues to be favorable for banks across the product portfolio.

Automobiles have been yielding good results, thanks to the uptick in demand trends, new product launches, richer product mix, and price hikes. Margins showed improvement, and the upcoming festive season is expected to build a robust order book for the sector.

FMCG struggled with revenue growth and rural stress, leading to an unstable demand. With moderation in pricing-led growth, volume growth is expected to lift the performance.

The IT sector witnessed mixed performance with a decline in BFSI and retail revenue. However, certain pockets of midcap IT companies were exceptional during Q1FY24.

The pharma sector garnered enthusiasm on the street, while the Metals and Realty sectors weighed down the earnings performance.

As India’s fundamentals remain resilient, the manufacturing industry maintains its alpha position. The revival in the investment cycle with increasing capacity utilization, deleveraged corporate balance sheets, a promising trajectory of credit growth, and favorable government policy initiatives will stimulate an uptick in domestic consumption. The boost is anticipated to particularly favor sectors like cement, capital goods/EPC, automobiles, banks, pharmaceuticals, and renewables in the forthcoming years.

Technical Outlook


Nifty consolidated in the 19,300-19,500 range throughout the week before closing marginally above the 19,300 mark on Friday at 19,310, down 55 points. Nifty has now closed in the red for the fourth consecutive week.

The last time Nifty closed in the red for four consecutive weeks was during the 17th February – 16th March 2020 period. The India VIX, known as the fear indicator, has risen by 20% from 10.14 to 12.14, in the last three weeks, giving major discomfort to the bulls. The Foreign Portfolio Investors (FPIs) Long-Short Ratio fell below the 40% mark for the first time since 21st April, 2023, indicating that the FPIs hold more short positions relative to long positions in Index Futures. Since the start of expiry on 27th July until 17th August, the Nifty Futures Open Interest (OI) has risen by 1% and the price has fallen by 1.50%, indicating a buildup of fresh short positions. The Put-Call Ratio (PCR), a sentiment indicator, has declined from 1.33 on 28th July to 1.05 on 18th August, signaling put writers’ hesitancy to build positions currently.

Nifty has taken support from the 50-Day Exponential Moving Average (DEMA) of 19,265 on the daily chart. A close below the 50 DEMA can intensify the selling pressure which can even take Nifty until 18,600 levels. For the uptrend to resume, Nifty needs to give a strong close above the falling trendline drawn connecting the high of 19,992 made on 20th July, 19,868 made on 27th July, 19,796 made on 1st August, and 19,646 made on 9th August.

Source link