November 21, 2015

Chart: Nifty’s Aggregate Profit Growth Goes Negative, For Three Consecutive Quarters of Contracting Profits

The NSE’s Nifty has 50 companies. That index is the top 50 companies in India by market-capitalization (technically, free-float market cap, meaning shares that aren’t owned by the promoters)

If you add up the revenues and profits of these companies, and you compare the aggregate numbers with the aggregates of the previous year (of the same companies), you see how the performance is of the Index as a whole. Given that revenues and profits tend to be skewed towards the bigger producers, this does skew the index towards the biggies – for instance, an ACC has a quarterly profit of just Rs. 100 cr. or so, while TCS has a quarterly profit of over Rs. 6,000 cr.

However, the aggregate numbers will usually smooth out any smaller issues, and is a useful way to look at the index as a whole.

The problem? Well, we’ve had three lousy quarters now, of falling profits, and of falling revenues.


No comments:

Post a Comment