Earnings to recover sharply in FY22 on economic revival: Report

"We expect 28 per cent and 19 per cent growth in net profits of the Nifty-50 Index in FY2022 and FY2023 following 11 per cent growth in FY202," it said.

The report noted that the growth in FY2021 reflects low base in a few sectors in FY2020 such as oil, gas and consumable fuels reflecting large adventitious or inventory losses in 4QFY20 and telecom reflecting low ARPUs and profits.

There is a possibility of moderate earnings upgrade over the next few months and the extent of earnings upgrades would be one of the key drivers of the market, it added.

Nonetheless, a few sectors may disappoint if consumption, especially discretionary consumption, was to decelerate on sustained Covid-19 impact on household incomes, said the report.

It has projected a strong recovery in the economy in FY2022 (9.3 per cent real GDP growth) following the likely large contraction of (-)8.6 per cent in FY2021.