Corporate profits

Record corporate profits fuel stock markets

Despite such a big release, Nifty is in good spirits. In the past two weeks, it has seen a rapid rise of 1,100 points from the low of 16,410 seen on December 20. So what is keeping stocks strong?

Market optimists are counting on better corporate earnings for Nifty50 shares. Nifty gained 15% in 2020 and 24% in 2021 as earnings on those 50 stocks fell from ₹3.17 lakh crore in FY20 to ₹4.2 lakh crore in FY21 , according to data from Capitaline. In the first half of the current financial year (through September 30), Nifty50 shares recorded ₹2.85 crore lakh of net profit. If the trend remains the same, Nifty50 shares could create a new earnings record of over 5.5 lakh crore.

“A new record for corporate earnings is what makes our market resilient despite the outflows of foreign institutional investors,” said a fund manager on condition of anonymity.

The market expects strong performance from the financials and information technology sectors, which hold 37.5% and 18% weighting respectively. These two sectors combined make up more than half of Nifty’s weighting, and corporate earnings from both sectors are meeting street expectations. The Financials in Nifty Index included six banking stocks, namely Axis Bank, HDFC Bank, ICICI Bank, Indusind Bank, Kotak Bank and SBI, and three Non-Banking Financial Companies (NBFCs), namely Bajaj Finserv, Bajaj Finance and HDFC Ltd. .