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[sludgehound]

Why India Continues To Rally Despite Worst Earnings Since 2009 -- Barron's Blog
23:11
Corporate India reported its worst earnings since the Great Financial Crisis in 2009. Fourth-quarter earnings at Nifty companies grew only 4% from a year ago, well below the 11% growth seen in the third quarter. Oil and gas, autos, and bank sectors all missed analysts' expectations.
Yet the Indian stock market continued to advance. The Sensex Index has gained 7.2% since Infosys ( INFY) kicked off the earnings season on January 9 . The WisdomTree India Earnings Fund ( EPI) and the iShares MSCI India ETF ( INDA) have rallied 6.8% and 9.2% respectively.
Has the Indian bull lost control?
Stock prices reflect not where corporates are but what they will look like in a year's time. The Indian government has taken a big step forward to lower consumers' inflation expectations and to start stalled infrastructure projects, which may hurt earnings in the short-term but will benefit corporates in the long-run, noted Morgan Stanley's Ridham Desai and team, who have been big India bulls:
Inflation expectations have come down not because of falling oil prices, but because the government has compressed spending, continued to curtail rural wage growth, increased minimum support prices at a fraction of the inflation rate and also proactively supplied food to the market
Remedying stalled projects was a more complex problem, but recent capex data shows that things are turning. These actions will eventually filter into earnings.
The Sensex Index rose another 0.3% this morning. Infosys gained 0.9%, HDFC ( HDB) lost 1% and the ICICI Bank ( IBN) gained 0.7%.
More at Barron's Asia Stocks to Watch blog, http://blogs.barrons.com/asiastocks/