Results: Metal story continues, oil may flop

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Metal, technology and cement sectors are seen outperforming while oil and banking sectors may lag.

Key indices have risen over 10 per cent since the beginning of September, a major trigger being expectations of strong July-September earnings.

Broadly, second quarter numbers will live up to investor expectations, opine analysts.

However, the current half of this fiscal is likely to witness a slowdown in growth momentum, with rising oil prices playing spoilsport.

"Overall, the situation seems to be sound, despite some concern over (rising) oil prices," said Jaideep Goswami, head of research, HDFC Securities.

"There is demand in the economy and companies focussed on the export front have also been doing well," he said.

"But if oil prices continue to rise, it could affect the perception of corporates and investors in terms of inflationary pressures and cost pressures," Goswami said.

With valuations no longer looking cheap, only earnings upgrades will be able to attract fresh buyers, dealers said.

Investment bank DSP Merrill Lynch shares the view of a strong second quarter performance by corporate India, though it said two factors tempered its bullish outlook.

"The growth momentum is likely to slow down going forward," said a preview note by the investment bank.

"Given rising inflation and interest rates, margins are likely to be under pressure. This suggests the upgrade phase in earnings is behind us," the note said.

The metals sector is seen as the clear outperformer, with the four Nifty companies "" Tata Iron and Steel Co, Steel Authority of India, Hindalco Industries and National Aluminium Co "" expected to report an average net profit growth of 64 per cent compared with the same period last year.

Technology is seen as the next best performing sector with the four companies ""Infosys, Satyam , Wipro and HCL ""seen reporting an average net profit growth of 46 per cent on year.