Stocks pricey, earnings cut likely: HSBC

Indian equities are expensive even after the worst start to the year since 2011 for the most accurate forecaster for the nation's benchmark stock index. The reason: Earnings.


Company earnings will grow 12 per cent in 2016, slower than the "very optimistic" 18.5 per cent forecast by analysts, Devendra Joshi, Asia equity strategist at HSBC Holdings Plc, said in a phone interview from Hong Kong. The S&P BSE Sensex ended 2015 within one per cent of his year-end target of 25,800, the closest call among the gauge's forecasters.  Stock Market Trading Tips

The Sensex, which tumbled into a bear market last month, is still valued at a 47 per cent premium over a gauge of emerging markets. The valuation may not sustain as a recovery in corporate profitability is taking longer than expected, Joshi said. Net incomes at the 30 index members have declined in four of the last five quarters, according data compiled by Bloomberg. The declining streak is the worst since 2008 when profits fell for six straight quarters amid the global financial crisis, the data show.  Himanshu Tiwari Astrologer Blog

"Earnings expectations still need to come down and, as such, valuations are still high on a relative basis versus the rest of the region," Joshi said, while maintaining his year-end Sensex target at 27,000. "Economic growth has been high last year but we have not seen it trickling through to earnings." While India is forecast to overtake a slowing China as the world's fastest-growing big economy, back-to-back years of poor rainfall have eroded incomes of the bulk of the nation's population even as rising bad loans at lenders have weighed on their profits. Credit Suisse Tuesday turned "bearish" on India, citing "unjustifiable premiums," while Goldman Sachs Group Inc. on March 2 cut its 2016 earnings growth forecast for the NSE Nifty 50 Index by 2 percentage points to 10 per cent.        Indian stock market astrology prediction

Indian stocks, the rupee and bonds saw their worst January and February since 2011, as global funds pulled a combined $2.9 billion from local shares amid anxiety about global growth. The Sensex trades at 17.7 times one-year forward earnings,  Share Market Astrology