Nifty Hits Fresh Record High on Earnings Optimism Ahead of Q3 Results Season
Indian equity markets began the year positively with Nifty reaching a new record high, driven by improving earnings expectations for the December quarter results season. A Balasubramanian from Aditya Birla Sun Life AMC highlighted that the rally is supported by value-driven participation, benefits from GST cuts and RBI rate reductions, with renewed interest in asset-backed companies and focus on sustained profit growth.
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Indian equity markets have started the new year on a strong footing, with the Nifty scaling a fresh all-time high, driven by improving earnings expectations ahead of the December quarter results season. A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, attributed the positive momentum to growing confidence that corporate earnings will strengthen in the coming quarters, supported by policy measures already in place.
Value-Driven Market Participation
Speaking to ET Now, Balasubramanian emphasized that the market's positive momentum reflects more than just speculative buying. "The trend at the start of the year is clearly positive. Expectations of better earnings post last year's GST cuts and the subsequent RBI rate cuts are now getting reflected in market behaviour," he said.
The market expert noted that recent gains are not purely momentum-led but are rooted in value-based buying across the broader market. "What we are seeing is value-driven participation, either through attractive earnings yields or stocks where prices have corrected but the underlying assets and businesses remain very strong," Balasubramanian explained.
Asset-Backed Companies Gain Investor Interest
| Market Driver | Impact |
|---|---|
| GST Cuts | Improved earnings expectations |
| RBI Rate Cuts | Enhanced corporate profitability outlook |
| Value-Based Buying | Broader market participation |
| Asset-Backed Companies | Renewed investor interest |
Asset-backed companies, in particular, have seen renewed investor interest, contributing to the recent upswing. According to Balasubramanian, this combination of improving earnings visibility and selective value buying is consistent with where the market was expected to head.
Focus Shifts to Sustained Profit Growth
"Earnings improvement in the current year should take the market to a different level. The Nifty touching a new high is broadly in line with that expectation," Balasubramanian stated. With the December quarter earnings season around the corner, he believes the focus will remain on companies that can demonstrate sustained profit growth.
Investors are looking beyond short-term rallies and rewarding fundamentally strong businesses in a gradually improving macro environment. The market's performance reflects confidence in corporate India's ability to deliver improved financial results, supported by favorable policy measures and economic conditions.
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