A study by Nomura research of consensus earnings estimates shows that earnings downgrades continued over the past month, long after the results season got over. As Europe tries to untangle its knots and the US remains in slumber, the risks for the rest of the world continue to increase. Those few earnings upgrade that have happened have led to only marginal increases in estimates. The downgrades are sharper. Worse still, valuation multiples in some cases have been cut by nearly 20%, with power and infrastructure firms facing the biggest cuts. Index heavyweight Reliance Industries Ltd saw a 15% cut in valuation multiple as well.
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