Strong Earnings Growth Will Override Pain Points For Markets, Taher Badshah Says

Equity market participants will now shift their focus to strong corporate earnings growth and away from pain points like inflation, potential interest rate hikes and higher oil prices.

That's the view coming from Taher Badshah, chief investment officer of Invesco Mutual Fund, who said “markets will give growth a chance and that will hold on to valuations.”

Most companies, including software service providers and banks, reported earnings that matched analyst estimates in the January-March quarter. The commentary from India Inc also hints at double-digit earnings growth next financial year, he told BloombergQuint in an interview.

Sector-Wise View

For the aviation sector, in particular, Badshah said some of the risks have played out “more quickly than anticipated”, adding that the sector has shown a consistent growth of 15-20 percent for the last 10-odd quarters. Airline stocks such as IndiGo, SpiceJet and Jet Airways have come under pressure recently, down between 9-15 percent for the day.

The view on other sectors:

• IT Firms: Technology firms have regained some confidence.
• Consumption: Underweight on staple, purely as function of valuations being challenging in some quarters of the sector.