Q2 Earnings To Be Driven By Banks, Says Centrum's Nischal Maheshwari

The earnings for the second quarter will continue to be strong and will be driven by banks, according to Centrum Broking Ltd.'s Nischal Maheshwari. 

“We continue to believe that the second quarter is going to be strong. The banking sector, which is in a goldilocks scenario, will drive earnings in the coming quarter," Maheshwari, chief executive officer of institutional equities at Centrum Broking, told BQ Prime’s Sajeet Manghat.

The microfinance institutions will be the beneficiaries of the recovery in rural demand, according to him. “The fall in wholesale price index in the last four months will show up in the second quarter earnings.” 

The information technology sector might disappoint again in the coming quarter, but the consumption side will post strong numbers, he said.

Earnings are not going to be impacted by the rising price of crude oil, as the benchmark indices are dominated by oil stocks, according to Maheshwari.

“I don't see much issue as far as earnings are concerned, while the oil and gas sector is going to be a beneficiary.” Further, consumption will see minimal impact with the rising oil prices, as the government will act on it with the elections coming up, he said. 

Brent crude oil price crossed the $97 per barrel mark on Thursday, the highest level since Aug. 31, 2022, after a drop in stockpiles in the United States major storage hub to critical levels, Bloomberg reported. 

The foreign institutional inflows for the current quarter are a disappointment because of the higher-for-longer stance of the Federal Reserve, according to Maheshwari. “But the domestic inflows will continue to remain strong.” 

The benchmark Nifty will hit a new high in the coming 6–12 months. But for the time being, we will have to wait and see how the yields pan out in the U.S., he said.

The continuity of the government and its policies post-elections will bring cheers to investors for another four to five years, Maheshwari said. "Historically, elections have been positive for the economy.”

The NSE seeking approval to extend the trading hours of index futures and options is not going to help the market, according to Maheshwari. “Extending the trading hours is not going to help as there is very little participation from international clients in the Indian derivative market.”

Currently, the trading volume between 11:00 a.m. and 2:00 p.m. is much lower than other hours, he said. “The problem of the manpower shortage also has to be addressed before extending the trading hours.”