Prabhudas Lilladher says earnings recovery unlikely in Q2, suggests this portfolio

Earnings remained muted for the Nifty50 companies in the first quarter ended in June, witnessing an impact of weak demand, slow private sector capital expenditure, liquidity tightness, and global trade issues. According to a report by Prabhudas Lilladher, the demand pressures are unlikely to abate in Q2 and further deterioration can be seen.

"In addition to poor consumer sentiment and demand, recent floods in more than 14 states will hamper the movement of goods and impact consumer demand in the run-up to the festival season. Although normal monsoons are likely to revive rural incomes and demand, we see little hope of that transpiring in 2QFY20," it added.

The brokerage believes all eyes now will be on a stimulus package by the government as slowdown impact deep and widespread.