The Nifty hit a fresh record high of 10,178 last month but lost momentum soon after and touched a low of 9688 on 28 September. The next crucial question is will the market retest record highs?
Well, the market could well retest record highs but not in a while amid strong headwinds in term of muted earnings growth period and slowdown in the economy, Tushar Pradhan, Chief Investment Officer, HSBC Asset Management (India) Private Ltd said in an interview with CNBC-TV18.
The market is likely to remain volatile for a while. Going into the September quarter there is not much hope of a recovery in this quarter. That leads the market to think in 2 ways -- the earnings estimate number for the end of the year which is close to 16-17% will get delivered when you get over 20% growth in next 2 quarters, said Pradhan.
If the market senses that it is not happening – either the earnings estimates will get adjusted downwards or the market would appear a lot more expensive as opposed to the number we will be posting in Q2.
Having said that, Tushar said that we have a very interesting Q3 coming up. On a YoY basis, if we look at the quarter ending December which will start coming in just around the time when Budget expectations would have already started building up will see a significant change.
Commenting on the markets, Tushar said that we will see better stock prices ahead but that might not come right away. It is a matter of time before economy witnesses turnaround.
On the oil & gas space, Tushar said that re-negotiation of gas contracts one of the triggers for gas stocks and there is continued margin expansion for refining & marketing companies.Energy prices across the world have collapsed and some of these contracts are coming for renegotiation and that is driving company profits up, he said.