Corporate earnings have been a constant source of disappointment for many quarters now. However, the tide seems to be turning. Bloomberg’s one-year forward consensus estimates for the Nifty’s earnings per share (EPS) are heading north (see chart).

The optimism is driven by the improving health of banks and expanding liquidity conditions. However, the ongoing consumption slowdown and subdued global growth cannot be ignored. In such a scenario, apart from the revenue and profit figures, investors should focus on cues about whether these estimates will sustain.

Automobiles: Tepid demand leading to high inventories can hit the earnings of auto companies. A watch on the demand outlook is, thus, essential. Investors will want to know the production strategies given that BS VI emission norms will be implemented from 1 April 2020. Concerns related to Brexit continue to haunt Tata Motors. Hence, investors would want to keep a watch on the commentary on Jaguar Land Rover.

Aviation: Financial woes at Jet Airways (India) Ltd pushed up airfares for metro routes during the quarter. IndiGo (InterGlobe Aviation Ltd) and SpiceJet Ltd are expected to gain. However, higher yields can be counter-balanced by a decline in the passenger load factor. In February, domestic passenger growth registered its slowest monthly gain in over five years.

Banks, NBFCs: Public sector banks’ recapitalization ratios will be watched. Commentary on unrecognized stresses in corporate loans, and the pace of bad loan resolution through the insolvency framework are crucial. Market share gain for banks from NBFCs is another important indicator. For NBFCs, the key parameters are asset-liability management, the liquidity outlook and the cost of funds.

Cement: March is a strong quarter for the sector. However, government-driven demand could have been impacted by the forthcoming general election. Choppy price trends make commentary on overall pricing important. As input costs ease, the outlook on margins is key.

FMCG: Commentary on volume growth of fast-moving consumer goods (FMCG) firms is crucial after worries of a consumption slowdown have surfaced. Easing input costs make the outlook regarding margin growth important. Investors will be keen to know if ad spend will be trimmed.

Information technology: Usually, the March quarter is weak for the IT sector as customers are into their budgeting term. This time, however, the execution of recently-won deals would aid performance. Revenue guidance for fiscal year 2020 along with deal pipeline will be closely watched. Also, the outlook on the banking and financial services vertical, considering weak global macro conditions, is important. The impact of new stringent US H-1B visa norms on sub-contracting costs and hiring plans too will be crucial.

Real estate: Investors will want to know how the transition to new accounting standards and the new goods and services tax regime have impacted the sector. Buyers may have delayed purchases because of the latter. Launch pipelines and inventory data should be watched. Other vital cues will come from real estate pricing strategies and how debt levels are moving.