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Indian companies across multiple sectors have reported disappointing results in the second quarter of fiscal year 2025, notes a new JM Financials report. Consequently, their poor performance has triggered stock price corrections for affected companies. The brunt of this weaker than expected earnings was largely borne by consumer centric sectors like FMCG (fast moving consumer goods), retail, and auto, which slacked largely due to dampened urban demand. For instance, India's largest automaker, Maruti Suzuki, reported a 5% YoY decline in its total domestic passenger vehicle wholesales, largely on the back of pent-up inventory. Similarly, Honda reported a staggering 23% YoY dip in its total sales during October 2024. A recent report by Bernstein noted that around 48% of the companies listed on the NSE100 index missed their earnings estimate for Q2FY25, the highest since March 2020. Most companies have mentioned deteriorated domestic demand, urban slowing, macroeconomic risk, and margin pressures as the main reasons behind the dip. "The quarter's earnings have made investors nervous," noted the JM Financials report. The challenging environment stems from multiple factors: softening consumer demand, rising input costs, and companies' limited ability to increase prices. Moreover, this is not limited to just one quarter. Companies have been reporting weak, single-digit earnings growth for the last six consecutive quarters. Data from India Data Hub also suggests that corporate profits of listed companies plunged by as much as 3.4% during the quarter ended September 30, 2024. This is in stark contrast to the year-ago period, where they had shot up by over 40% The oil and gas sector had a difficult quarter, with refiners hit by weak margins and city gas distributors struggling with higher input costs. Financial institutions showed mixed results. While government-owned banks reported strong numbers, microfinance institutions and some private lenders faced massive difficulties with their unsecured loans. Most notable amongst this was the case of IndusInd Bank, which saw its net profits dip by 40% amidst burgeoning provisions, which climbed 87% to Rs 1,820 crore in Q2, as against Rs 974 crore reported in the year-ago period. <h2>Markets head southwards</h2>The selling trend by FPIs has dragged down the major Indian indices, the Nifty 50 and Sensex, both of which have dropped by around 8% since the beginning of this selling spree in October. According to National Securities Depository Ltd. (NSDL) data, FPIs offloaded equities worth a significant Rs 19,994 crore in just the first five trading sessions of November last week. The impact is clearly visible on Indian stock markets. Data suggests that while every sector in October closed the month in red, auto, oil and gas, and consumer durables were the most badly hit, each declining by as much as 10% during the month. Another indicator underlining the inherent weakness of the market was that the month saw only 242 stocks hit their 52-week high, significantly below the usual monthly average of 310.

India Inc. stares at an earnings dearth in Q2, FMCG, auto, and consumer durables falter

New Delhi: <keyword id="19900795" type="General" weightage="20" keywordseo="foreign-investors" source="keywords">Foreign investors</keyword> pulled out a massive Rs 94,000 crore (around USD 11.2 billion) from the Indian <keyword id="19925636" type="General" weightage="20" keywordseo="stock-market" source="keywords">stock market</keyword> in October, making it the worst-ever month in terms of outflows, triggered by the elevated valuation of domestic equities and attractive valuations of <keyword id="20295104" type="General" weightage="20" keywordseo="Chinese-stocks" source="keywords">Chinese stocks</keyword>. Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020. The latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024. Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April and May, data with the depositories showed. Looking ahead, the trajectory of global events like geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US Presidential election will play a crucial role in shaping future foreign investment in <keyword id="20014814" type="General" weightage="20" keywordseo="Indian-equities" source="keywords">Indian equities</keyword>, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said. On the domestic front, key indicators like inflation trajectory, corporate earnings, and the impact of festive season demand will also be closely watched by FPIs as they assess opportunities in the Indian market, he added. According to the data, FPIs recorded a net outflow of Rs 94,017 crore in October. The intensity of net outflows could be gauged from the fact that except for one day, FPIs were net sellers throughout the month, bringing their total investment for 2024 down to Rs 6,593 crore. This relentless selling resulted in about an 8 per cent decline in benchmark indices from their peaks. Several factors contributed towards this massive withdrawal of foreign capital from the Indian equity markets in October. The major among them is the elevated valuations of Indian equities. This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese economic growth has made Chinese equities increasingly appealing to global investors, Srivastava said. Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. In addition, FPIs pulled out Rs 4,406 crore from the debt general limit and invested Rs 100 crore from the debt Voluntary Retention Route (VRR) during the period under review. So far this year, FPIs invested Rs 1.06 lakh crore in the debt market.

FPIs withdraw record Rs 94,000 cr from Indian equities in Oct on attractive Chinese valuations

As the <keyword id="115551" type="PERSON" weightage="20" keywordseo="Indian-equities">Indian equities</keyword> continued to scale new highs post the <keyword id="6360189" type="COMPANY" weightage="20" keywordseo="union-budget">Union Budget</keyword> for FY22, the net foreign portfolio investments (<keyword id="725142" type="COMPANY" weightage="20" keywordseo="FPI">FPI</keyword>) into the Indian equities in February was ₹25,787 crore. The <keyword id="10842554" type="UNKNOWN" weightage="20" keywordseo="total-net-fpis">total net FPIs</keyword> in 2020 now stand at ₹45,260 crore, as per <keyword id="77072" type="ORGANIZATION" weightage="20" keywordseo="NSDL">NSDL</keyword> data. Foreign investments have continued to flow in post the Union Budget which announced further liberalisation measures including privatisation of banks and also did not come up with a new tax levy. So far, in the financial year 2021-22, net FPIs into equities stood at ₹2.63 lakh crore, the highest ever FPI inflow into the country. Further, the net foreign institutional investment (FII) during the month was ₹42,044.46 crore. The rising foreign investments have also led to the strengthening of the Indian rupee. However, the recent bond yield surge both in the US and the domestic market have caused a frenzy in among the investors leading to bear run in the stock markets. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/railtel-ipo-shares-make-a-decent-debut-list-on-bourses-at-16-percent-premium/articleshow/81222047.cms">RailTel makes a decent debut — shares list on bourses at 16% premium</a> <a href="https://www.businessinsider.in/stock-market/news/crypto-firm-kraken-seeks-to-double-its-valuation-to-10-billion-as-trading-in-digital-assets-skyrockets/articleshow/81222984.cms">Crypto firm Kraken seeks to double its valuation to $10 billion as trading in digital assets skyrockets</a> <a href="https://www.businessinsider.in/india/news/bharat-bandh-over-eight-crore-traders-across-india-shut-shop-in-protest-against-rising-fuel-prices-and-changes-in-gst-rules/articleshow/81223361.cms">Bharat Bandh – over eight crore traders across India shut shop in protest against rising fuel prices and changes in GST rules</a>

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India Inc. stares at an earnings dearth in Q2, FMCG, auto, and consumer durables falter

Ira Alok Puranik

FPIs withdraw record Rs 94,000 cr from Indian equities in Oct on attractive Chinese valuations

PTI

FPI invests ₹25,787 crore in Indian equities in February

IANS

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