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Graphic: Subrata Jana/Mint
Graphic: Subrata Jana/Mint

Market roundup | Healthy beats-to-misses ratio for Dec quarter

In other news, rising shale production bodes ill for Opec, banks may see weak operating profit growth in FY18

More companies have beaten estimates for the quarter ended December than those that have missed them, according to JM Financial Institutional Securities Ltd. The beats-to-misses ratio of 165% was far superior to that of the preceding three quarters, says the brokerage firm, adding that consumption-related sectors such as cement, building materials and consumer, which were expected to be negatively impacted by demonetization and the subsequent cash crunch, proved more resilient than expected. However, the overall profit growth is still in line with JM Financial’s estimate of 9.9%.

The analysis is done for more than 130 companies cumulatively accounting for about 65% of the market capitalization on BSE.

Surging shale a hurdle for Opec strategy

Opec’s (Organization of the Petroleum Exporting Countries) 30 November output agreement to cut production by 1.2 million barrels per day (bpd) may have put a floor under the oil price, but has also awakened US shale. Exploration and production companies have added 77 rigs this year to 24 February, according to the latest figures from Baker Hughes, while US shale output is forecast to reach about 4.87 million bpd in March, according to the Energy Information Administration’s latest Drilling Productivity Report. That’s the highest since May 2016.

Estimates of just how much shale will be added over this year range from as high as 900,000 bpd by Macquarie and Rystad Energy to a more modest 400,000 bpd by JP Morgan Asset Management. Bloomberg

Banks may see weak FY18 operating profit growth

Indian public sector banks and large private sector banks are likely to see a weak growth in operating profit for the next fiscal year as well, according to Deutsche Bank. In a note on bank earnings, the firm said that operating performance of banks has declined since fiscal year 2015 mainly because of the piling of bad loans at a fast pace and decelerating credit growth.

Some large banks, especially public sector lenders, may see their operating profit decline in FY18. “We reduce our earnings forecasts by 3-8% for most large PSU (public sector) and private banks," said Deutsche Bank in the note.

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