Nifty revised downward

Consensus earnings estimates for Nifty companies have seen a downward revision over the past one month on account of demonetisation, global developments and stock-specific events. According to Nomura, IDEA, Coal India and Tata Motors have seen the maximum downward revision in the past one month. On the other hand, Adani Ports & SEZ, ONGC and Larsen & Tourbo have seen the highest upward revision. IDEA has seen a massive 25 per cent cut in its 2016-17 earnings estimate due to the launch of Reliance Jio, which is offering free services till March and also due to cash crunch created by demonetisation. In other words, analysts expect IDEA to posts 25 per cent lower earnings than what they had earlier envisaged. Following the earnings revision, the Nifty now trades at around 15.5 times one-year forward earnings, around nine per cent lower to its five-year average. According to Nomura, IDEA, Dr Reddy’s, Ambuja Cement and Tata Steel are currently trading over their long-term trading averages. Meanwhile, BPCL, Bharti Infratel, Wipro, TCS and HDFC Bank have logged below long-term trading averages.