Mumbai: Indian companies’ fiscal second-quarter results season is set to kick off this week, offering evidence as to whether the soaring Sensex benchmark index of the Bombay Stock Exchange (BSE) has real legs, and what toll, if any, has the significant belt-tightening on the credit front, as well as a sharply rising rupee, taken on many companies.

One macro earnings forecast from brokerage firm Motilal Oswal Securities Ltd predicts that Sensex companies—the 30 bellwether companies in the index—would only grow revenues at 16% compared with 27% growth in the April-June quarter and an average of 26% in the last nine quarters.

The report suggests that the impact of rate hikes by the Reserve Bank of India—the overnight lending rate of 7.75% is at a five-year high—and the steady appreciation of the rupee—at a nine-year high against the dollar—could lead to earnings for auto, information technology and pharmaceutical firms being dented.

With Infosys Technologies Ltd set to report on Thursday, followed by HDFC Bank Ltd, the health and future expectations from two key sectors will be quite visible before a stampede of earnings from all companies in a two-week period.

“We expect growth to continue in line with the trend of the last few quarters," says a bullish Shriram Iyer, head of research at Edelweiss Securities Ltd. “We are not expecting positive surprises. But we are also not expecting negative surprises."

Other market observers are also bullish. Amitabh Chakraborty, head of equities at Religare Securities Ltd, also predicts “strong" earnings and a forecast from his brokerage says revenues for stocks under their coverage will grow by 21% with profit margins growing by 16.6%, especially for cement, real estate as well as oil and gas companies.

Analysts also point to stronger-than-expected advance tax collections as a sign of what could be robust results. Such collections from the top 10 Sensex companies could be as much as 35% more than last year, on an average, notes Deven Choksey, managing director of KR Choksey Securities.

While analysts remain focused on what impact the earnings will have on the Sensex, which closed last week at 17,773.36, gaining 482.26 points or 2.79% during the week, and setting an intra-day record on Friday of 17,979.18, other indicators of economic and corporate health have been less bullish. And anecdotally, there is growing evidence of inventory pile-ups in sectors such as auto. Advertising in print media, often a key measure of belt-tightening by companies, has also been quite soft during the quarter, due to a pull-back from realty and other sectors.

Meanwhile, credit growth has slowed to 25% this year from 30% last year, and the Index of Industrial Production grew by 7.1% in July, compared with 13.2% in the year-ago month, suggesting slowing consumer spending and corporate earnings. In April-July, the index slowed to 9.6%, compared with 11.1% in the year-ago period.

Meanwhile, revenues for the top 100 companies on BSE fell 3.28% in the April-June period compared with the January-March period and profits barely rose, up 1.6% according to a Mint analysis, perhaps suggesting what trend might be in store for the July-September period. However, from a year-before perspective, revenues grew 15.20% during April-June compared with the same quarter last year, and net profit grew 36.96%.

Just for the top 30top 30 top 30 top 30 top 30 Sensex firms, revenues fell 2.9% during April-June against the January-March quarter even as net profit rose 7.73%. But revenues rose 17.5% during that quarter in the year-ago period with net profits rising a healthy 31.9%.