The skyrocketing prices of oil and commodity are pressuring margins of companies that had grown used to low input costs. But Gautam Duggad of Motilal Oswal believes financial companies will not be impacted by this commodity cost inflation.
Speaking in an interview to CNBC-TV18, he said, “Banking and financials, which makes 40 percent of the index and almost 30 percent of the Nifty earnings, don’t directly get impacted by rising commodity cost," Duggad, who is the head of research-institutional equities at Motilal Oswal Financial Services said.
However, he added, there are sectors like autos, consumer staples, consumer durables and to an extent cement that may see some trimming of margins. But, I don’t think Nifty will have a significant impact because of commodity cost, he said.
While investors are tampering their expectations of a sustained earnings recovery, Duggad believes upsurge in COVID cases or higher commodity prices do not warrant a cut in earnings.
“The recent news flow around COVID is not very comforting; more importantly the crude oil price and some of the other commodities which have had an inflationary run in the last two-three months is also slightly unnerving from short-term margin perspective, but so far there is nothing which warrants any panic on earnings estimate,” he said.
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