BFSI outperformance in July-Sept quarter lifts overall Nifty EPS – what should investors know? ICICI Securities suggests This

The outperformance of the BFSI (Banking, Financial Services, and Insurance) segment in the July-September quarter of the financial year 2022-23 (Q2FY23) lifts the overall Nifty EPS (Earnings Per Share) by 4.5 per cent sequentially and around 3 per cent year-on-year (YoY).

Amid the key outperformance by index-heavy BFSI space, especially corporate banks, the Q2 results were at 9 per cent, ahead of estimates wherein Nifty EPS came in at Rs 185 a share against an estimate of Rs 170 apiece, ICICI Securities said in its report on Nifty’s higher EPS.

Along with BFSI, oil & gas, pharma, and the capital goods domain also contributed to the rise in Nifty EPS, the domestic brokerage said in its report.

The domestic markets have been outperforming their global counterparts and hit a 52-week high in the current week amid healthy growth prospects domestically. On the other hand, the international markets have found comfort in recently released lower-than-expected inflation readings.

They expect a decline in the pace of interest rate hikes by global central banks on the back of already existing growth concerns, the brokerage said while explaining the global markets' scenario.

“In the banking space, key positives were a revival in business growth, which was around 17-18 per cent YoY, improvement in margins around 5-25 basis points sequentially, and declining NPA (non-performing assets) ratio with healthy PCR (Provisioning Coverage Ratio),” ICICI Securities said.

The brokerage also noted that the overall management commentary was upbeat across sectors more so on domestic demand prospects and recovery in margin profile amid a benign commodity price outlook and operating leverage at play.

With capex cycle revival underway domestically and increasing acceptance of India as a credible, quality-driven manufacturing hub, ICICI Securities stay constructive on overall markets.

“We believe any dips should be used to build a long-term portfolio of quality companies that have lean balance sheets, are capital efficient in nature, and possess growth longevity,” the brokerage advises investors to set their strategy with respect to long-term investment.