Rupee rout, oil surge put earnings estimates of firms at downgrade risks

Analysts see muted July-September profits for Nifty companies

The rupee’s longest rout since 2000 and oil’s surge to a four-year high have put earnings estimates of Indian companies at the risk of downgrades.

Analysts have boosted the average profit forecast for NSE Nifty 50 Index companies by 9.2 per cent this year, shrugging off a 12 per cent slump in the gauge since August. But history suggests the divergence won’t extend for long, and the growing stress in Asia’s third-largest economy may soon translate into lower projections.

Not that a weaker rupee is bad for all Indian companies -- exporters including software producers and drugmakers will gain in local-currency terms.