BFSI, commodities expected to drive FY22 earnings

New Delhi: India’s banking, financial services and insurance (BFSI) sector along with commodities are expected to drive FY22 earnings, said Motilal Oswal Financial Services (MOFSL) in a report. Accordingly, MOFSL has placed BFSI, IT, metals, and cement in the ‘OW’ (overweight) category in its model portfolio. Besides, it has placed consumer, auto, healthcare, and capital goods […]

New Delhi: India’s banking, financial services and insurance (BFSI) sector along with commodities are expected to drive FY22 earnings, said Motilal Oswal Financial Services (MOFSL) in a report.

Accordingly, MOFSL has placed BFSI, IT, metals, and cement in the ‘OW’ (overweight) category in its model portfolio.

Besides, it has placed consumer, auto, healthcare, and capital goods in ‘Neutral’ category and ‘UW’ (underweight) on O&G and infrastructure sectors.

“Corporate earnings in 4QFY21 were led by cyclicals and a combination of low base and strong demand revival as economic activity improved. Corporate India displayed tremendous resilience in FY21, with the Nifty ending the year with a healthy (14 per cent) earnings growth, which was unthinkable a year back,” the report said.

“The second Covid wave in April-May, 2021 has soured sentiments and impacted economic activity. Since the restrictions this time were localized and less stringent versus the lockdown in CY20, we expect the impact in 1QFY22 to be contained.”

According to the report, earnings momentum is expected to accelerate in FY22 as the pace of vaccinations picks up and the economy opens up further.

“BFSI and commodities are expected to drive FY22E earnings. The market has been strong and largely looked through the second Covid wave on the back of strong liquidity and robust participation from non-institutional investors.”

“The recent commentary by the (US) Fed on earlier than anticipated tapering and India’s elevated CPI print have rattled some nerves, even as equity-bond yield dynamics are not showing any red flags.”