Subdued earnings may spur market correction

Earnings disappointment can be the next big catalyst for a market correction over the next few weeks as India Inc unveils Q2 results after Bajaj Auto's tepid festive sales dampened the market sentiment, according to analysts.

- PUNEET WADHWA

Fast-moving consumer goods (FMCG) giant Nestle also disappointed the Street with a modest uptick in Q2 sales. The developments come amid geopolitical tensions in West Asia and the uncertainty surrounding the outcome of the US presidential polls. The Reserve Bank of India's caution on inflation in the recent policy review meeting is also on the market's radar.

Concerns over earnings not picking up to justify the current market valuation and valuations of select stocks are not limited to the autos, but could be a wider consumption-related sectors' issue, said G Chokkalingam, head of research at Equinomics Research.

Within the various market segments, the mid-and smallcaps could see a sharper fall if earnings do not meet expectations, he cautioned.