"Earnings growth (in Q3) will be lower than the prior 2 quarters (average 11 percent), sales growth should slip to single digit (8 percent), and margins will dip. While earnings growth band is not dissimilar to the last 4 quarters, the rising chorus of earnings upgrade expectations will sound flat, this quarter at least," reports have stated.
Citi's views are in contrast to most views, which hint at earnings being better in Q3 for most of the corporates. However, one is likely to see a divergence in earnings with media, FMCG and Pharma continuing to do well, while metals and capital good could disappoint.
The earning season kicks-off today with the results of IndusInd Bank. All eyes, however, would be on Sensex companies with Infosys set to report results on January 11. The market is expecting to a muted performance from the company and would look to revenue guidance.
Results of banks also would be carefully analysed given the sharp run up in stocks from the sector.