Next 3-6 months will be crucial for IT sector; many sectors to see pressure on margins, says Krishna Kumar Karwa, MD, Emkay Global

Stock market have given a sharp negative reaction on the Q4 results of IT companies TCS and Infosys along with HDFC Bank's March quarter results. What lies for the markets if bank and IT companies' results disappoint? 

It is the first time in the last 2-2.5 years that earning cuts have been indicated for the next financial year and this is a big development for IT companies. If the situation does not improve over the next 3-6 months, there could be PE cuts too, Krishna Kumar Karwa, Managing Director at Emkay Global tells Zee Business. 

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He said that it is a picture-perfect situation in terms of valuations.

While many top banks are still to announce their quarterly earnings, Karwa explained the reason behind poor performance in the bank sector. He said that due to the upcoming mergers, and other commotions, people are showing lower results in bank stocks. However, the banks' results are still pending, and the bank may grow positively.

However, there is an issue of ownership in the bank's share prices. Therefore, there could be a price correction. Wherever the share prices are high and expectations are high, it is bound for the market to show correction even at the slightest of negative or disappointing news, said Karwa. 

Wherever there is under ownership, there is safety, and it is volatility whenever there is over ownership. 

The under ownership is in utility, power and metal sectors where there is safety. One can expects good results in relatively smaller sectors like paper and fertiliser, chemicals, the MD said. 

Due to the increased prices of crude oil and as India is involved in the import of crude oil, the confidence is low due to an increase in inflation.

Small-cap and mid-cap sectors like capital goods are showing strong balance sheets. There has been a good pick-up in small cycle pick-up. In fact, the paper sector is growing along with the sugar sector. Domestic investors are putting their investment in the Indian stock market, and this is why despite foreign investment portfolio investors (FPI) pulling out their funds, the stock market is going strong, said Karwa.

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FY 23 मार्केट आउटलुक

अगले 3-6 महीने IT सेक्टर के लिए काफी अहम, कई सेक्टर्स में मार्जिन पर दवाब देखने को मिलेगा : कृष्ण कुमार कारवा, MD, एमके ग्लोबल#EmkayGlobalFinancialServices @deepdbhandari @KarwaKK @EmkayGlobal pic.twitter.com/y2hQLjjabx

— Zee Business (@ZeeBusiness) April 19, 2022