Indian markets experienced a robust start to the fiscal year, with approximately 70% of tracked companies meeting or exceeding profit projections. Growth was notably spearheaded by the mid-cap and small-cap sectors, alongside a strong performance from the financial services industry.
Key performance drivers:
- Broad-based beats across diverse sectors
- Financial institutions leading valuation upgrades
- Surprising strength in smaller market capitalizations
Despite this optimistic backdrop, HSBC researchers remain cautious regarding the coming months. The analysts point to persistent commodity price inflation as a primary hurdle that could erode profit margins for manufacturers and consumer goods firms.
Furthermore, analysts suggest that the temporary boosts provided by GST adjustments and favorable inventory revaluations are beginning to dissipate. Consequently, investors may face a period of downward revisions as the economy adjusts to these structural realities.
