 "Earnings expectations key for Indian stocks: Nomura")
Nomura said earnings expectations have been a key factor in the performance of Indian stocks this year, unlike last year when the rally was driven by a contraction in global risk premiums and improved sentiment from government reforms.
Data for NSE stocks reveal that more than half of the difference between individual stock price movements in 2013 can be attributed to consensus earnings changes over the same period, the note said, compared with less than a tenth last year.
Nomura added NSE stocks that have underperformed this year even though their earnings have not been downgraded are: Reliance Industries, Coal India , GAIL (India) , NTPC , Cairn India Ltd, Reliance Infrastructure , and Power Grid Corp of India.
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Others in the same category include ICICI Bank , Axis Bank, and Maruti Suzuki India .
However, stocks with “excessive outperformance” are Tata Consultancy Services , HCL Technologies , Oil Natural Gas Corp, Bharat Petroleum Corp , Ambuja Cements, Lupin and Dr. Reddy’s Laboratories .
Meanwhile, the top stocks with “excessive underperformance” are Hindalco Industries , Bharat Heavy Electricals , Coal India , Punjab National Bank, Bank of Baroda , Larsen & Toubro , and Bajaj Auto.
Reuters