Which sectors are expected to shine in Q1 nos?

While, the Q1 earnings season has already kicked in, all eyes are on tech bellwether Infosys'  results, which is expected in less than 24 hours. However it is also important to get a sense of how experts are expecting various sectors to perform.

 

Opinions stand divided on how the overall earning results will pan out. Experts are very confident about the earnings season and expect a 15-20% earnings growth.

 

IT to be hit due to rupee; but Infy could surprise

 

AK Sridhar, CIO of UTI Mutual Fund has a view that for most of the sectors, there is little amount of cautious optimism in terms of what's happening. IT is expected to spring up certain surprises whereas auto could bring out some negative surprises.

 

Software shares have underperformed the benchmark indices in the past four months on fears that these companies may downgrade their 2007-08 earnings estimates to factor in the rise in rupee. Historically, earnings growth of software companies have slowed in Q1 of every fiscal, as the balance sheet reflects wage hikes at the start of the year. This time the 7-8% rise in the rupee against the dollar during the quarter has added to their woes.

 

But experts are positive that Infosys Technologies' record of consistently surprising the market with better-than-expected guidance will have a bearing on the near-term outlook for software shares in general, which have been shunned by investors for the past four months on concerns of the rising rupee affecting profitability.

 

Capital goods, cement get thumbs up; IT, auto, pharma may disappoint

 

Sandeep Nanda, Head of Research at Sharekhan has a view that capital goods, cement and banks are likely to post strong numbers whereas IT, auto and pharma are going to be a mixed bag. "We have been always optimistic on cement, possibly the monsoon is playing now. But inspite of it, there is nothing to worry about in cement" adds Sridhar.

 

Paras Adenwala, CIO, ING Investment Management, said that they are expecting good numbers from the media sectors. However, he feels that IT, auto, pharma and FMCG will report disappointing numbers.