After opening the day marginally higher, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the telecom sector and realty sector witnessing maximum buying interest.

The BSE Sensex is trading up 166 points (up 0.5%) and the NSE Nifty is trading up 51 points (up 0.5%). The BSE Mid Cap index is trading up by 0.8%, while the BSE Small Cap index is trading up by 1%. The rupee is trading at 64.33 to the US$.

In the news from global financial markets, China's second-quarter gross domestic product (GDP) maintained its annual growth rate at 6.9%. Likewise, urban investment in June remained steady with an 8.6% annual growth rate.

The news come as a welcome breather as investors watch the world's second-largest economy for any signs of slowdown amid concerns over high debt levels.

That said, many concerns remain for China.

The Chinese government is aiming for annual GDP growth this year to come in around 6.5%. This is lower than the 6.7% pace recorded in 2016. It would also be the slowest growth in 26 years.

Note that, while the Fed's balance sheet expanded rapidly during the financial crisis, from less than US$900 billion before 2007 to US$4.5 trillion in 2014, the PBOC's balance sheet less than doubled in size during that period.

China is staring at rapid domestic credit growth. Also, as per ratings agency Moody's, China's structural reforms are not enough to arrest its rising debt.

Moody's Investors Service has downgraded China's sovereign ratings by one notch to A1. The agency expects the financial strength of the world's second-largest economy to erode in coming years as growth falters and debt continues to rise.

Many economists are also of the view that central bank stimulus measures are masking the deeper problems of industrial overcapacity and high levels of corporate debt in China.

A recent issue of Vivek Kaul's Inner Circle (requires subscription) takes a closer look at the Chinese economy and explores how America and China are on the verge of swapping their economic ideologies.

In other news, many listed companies are scheduled to announce their June quarter results today.

The list includes companies such as Canara Bank, Amtek Auto, Mastek, Mindtree, Bajaj Finance, etc.

Accordingly, market participants will be tracking the above companies today.

While there's hoopla surrounding the ongoing earnings season, we don't see much to cheer about.

Earnings growth has slid in FY17 despite the lower tax outgo and other income boost. Companies focused on the domestic market too have slowed due to notebandi.

Further, the actual performance for the last quarter of FY17 has been far below brokerage estimates.

This trend can be seen clearly in the chart below:

Earnings in Contrast with Market Trends

This begs the question: How can we make money in a volatile market with little support from earnings trends and brokerages who can't seem to get it right?

We believe a well-defined process and bottom-up approach to investing can help one sail safe and earn good returns in these markets.

Our colleague Richa also believes in a well-defined process. Her phenomenal track record in the small-cap space over an entire market cycle - not just since 2014! - is proof enough.