Australian companies have lifted profits and earnings outlooks after one of the most upbeat reporting seasons in years.
The February reporting season has wrapped up with more than half of Australia's listed companies beating earnings expectations - above the average of 43 per cent of companies.
And despite talk of the end of the mining boom, the resources sector has posted big profit rises as production picks up after years of investment.
The benchmark S&P/ASX200 has risen by four per cent in February, ending at 5,404.8 points on Friday.
Banks and resource stocks had played a bigger role than usual in driving the performance of the market, AMP head of investment strategy Shane Oliver said.
"Key themes have been a massive turnaround for the resources stocks (notably Rio and BHP), leaving the sector on track for circa 40 per cent earnings growth this financial year," Dr Oliver said.
Rio Tinto posted a 10 per cent rise in underlying profit to $US10.2 billion in mid-February, while BHP Billiton lifted half year net profit by 83 per cent to $US8.1 billion.
Strong results from the big banks have driven expectations of a 10 per cent rise in profits for financial stocks for the full year, with the rest of the market more muted but still positive on six per cent.
"The bottom line is that Australian earnings look to be on track for growth of around 15 per cent this financial year," Dr Oliver said.
Dividends have risen by 14 per cent from a year ago, helped by payouts from Telstra and the Commonwealth Bank.
"At 64 per cent the dividend payout ratio is still not excessive for the overall market," Dr Oliver said.
Analysts at Deutsche Bank noted a rebound in the industrial sector, driven by an improvement in the housing market that has lifted companies with exposure to construction, such as Boral.
Head of research sales for Deutsche Bank, Glenn Morgan, said earlier this week that the mood among institutional investors has changed.
"The clients have stopped asking us `where is the risk?' and they've started asking `where is the opportunity?'," he said.