The brokerage firm said the second-quarter earnings of companies in the current financial year have been encouraging with most companies meeting its expectations.
“The positive earnings momentum continued in Q2FY22 and the overall earnings trajectory, too, has continued strong. We don’t foresee significant changes in the earnings expectations for FY22/23 post the quarterly numbers with the possibility of only minor upgrades,” it said.
Axis Securities believes sector rotation with a focus on quality and momentum will deliver superior returns moving forward. The brokerage firm also observed that market volatility is steadily rising but is still below the long-term average, ruling out significant near-term correction from the current levels.
The brokerage is of the view that how the demand scenario in the domestic economy develops will hold the key for earnings and market returns. While the economy has seen pent-up demand on the back of both the first and second wave of the pandemic, the sustainability of that demand has remained questionable given the extent of job losses.
Hindustan Unilever, the country’s largest FMCG company, recently warned of increasing slack in the rural demand environment even as urban demand is improving due to easing of restrictions.
In terms of sectors, Axis Securities has retained its overweight stance on specialty chemicals, information technology, metals and telecom.
Further, the brokerage has named HCL Technologies, Maruti Suzuki India, ICICI Bank, Bajaj Auto, Varun Beverages, Krishna Institute of Medical Sciences and a few others as its top picks for November.
Agencies
