Source: Bloomberg

There was a time, not too long ago, when the consensus opinion stated that the second half of the current financial year will be much better. Pundits confidently said that the second half will allow companies to compensate for the poor performance in the first couple of quarters.

Now, the mood is gloomier as inflation, and therefore interest rates, remain high, the economy slows down both from internal and external pressures, and as commodity prices remain at elevated levels. Not only have analysts cut earnings per share targets for the current fiscal, they have come down even more sharply on forecasts for the next financial year. The chart above says it all. With economists predicting a sharper economic slowdown and the rupee depreciating, the trend is only likely to continue.