Slow grind looms for stocks as demand stalls, says broker

Demand concerns in the economy are now coming to the fore, says Gautam Duggad.

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Without a government cut in the corporate tax rate during the period, earnings were “in line but muted,” according to Duggad.
By Ronojoy Mazumdar

Indian stocks are set for a “slow grind,” with the outlook for domestic demand suggesting earnings growth won’t recover for some time, according to Mumbai-based brokerage Motilal Oswal Financial Services.

“Demand concerns in the economy are now coming to the fore,” Gautam Duggad, an analyst at Motilal Oswal, wrote in a note. Should there be no improvement, it raises “the risk for earnings downgrades in FY21”.


Companies delivered better-than-expected earnings for the quarter ended September, with about 70 per cent of Nifty firms with comparable data reporting net income that beat or matched analyst estimates. Without a government cut in the corporate tax rate during the period, earnings were “in line but muted,” according to Duggad.

India is contending with the slowest economic growth in six years, and a contraction in consumer demand has hurt sales in industries from automobiles to retail.

“We expect more policy action from the government but do not foresee any sharp recovery in demand,” said Duggad.
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