According to initial estimates of brokerages about the performance of India Inc in the December 2017 quarter, India Inc is expected to witness a further improvement in earnings recovery. While the low base caused by demonetisation is a major factor for the jump to be seen in the numbers, festive season, shift in demand to organised players due to the Goods and Services Tax and higher commodity prices are the other reasons. Kotak Institutional Equities expects Nifty 50’s profit to grow 15.4 per cent year-on-year, while Motilal Oswal sees 18 per cent jump in Q3 profit (highest in 14 quarters).

B2C sectors, such as automobiles, cement, consumer and NBFCs are expected to benefit from the low base of demonetisation. Some of the above sectors are also expected to be helped by festive demand and GST. In addition to this, sectors such as energy and metals will also help in earnings recovery due to higher crude and metal prices. On the other hand, sectors such as telecom, information technology, pharmaceuticals and PSU banks will continue to disappoint.

In Q2FY18, India Inc witnessed a modest recovery. According to data provided by Capitaline, Nifty 50 companies (excluding financial services and oil and gas) had reported topline growth of 11 per cent year-on-year compared to 7 per cent in June 2017 quarter. Even profitability saw stark improvement with growth in operating profit and adjusted net profit of 14 per cent and 7.4 per cent compared to 2.4 per cent and 4.1 per cent, respectively, in the previous quarter.

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