A 40% Earnings Downgrade Awaits Indian Stocks, BofA Says

(Bloomberg) -- Earnings estimates for Indian firms may be slashed by about 40% this fiscal year and next due to a host of global and domestic risks, according to Bank of America Corp.

Consensus estimates for NSE Nifty 50 companies are lofty and haven’t moderated despite a weak outlook for software firms, analyst Amish Shah wrote in a note Thursday. Estimates for the 2024 and 2025 fiscal years may be slashed to 11% and 9% respectively from 17% and 16% as the March quarter earnings season gets underway, he added.

Demand in India’s urban areas is expected to peak and revival in rural parts remains slow, according to Shah. Weakening global growth and volatile commodities add to the bleak outlook for corporate earnings. 

“We see no upside to our Nifty year-end target of 18k; would look to book profits,” the note said. In March, the bank suggested buying local shares on dips as the Nifty index dropped below 17,000 to briefly enter a correction.

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