Moneycontrol
Nov 13, 2017 11:35 AM IST | Source: CNBC-TV18

The best of macro story is behind & earnings recovery can take markets higher

The valuations now appear to be on the higher side and earnings continue to remain sluggish, says Harsha Upadhyaya, Head - Equity investments for Kotak Mutual Fund.

CNBC TV18 @moneycontrolcom

CNBC-TV18

The S&P BSE Sensex has rallied a little over 25 percent so far in the year 2017 and fear of higher valuations without a meaningful recovery in earnings has now started to grip market participants.

The equity market is not getting much support from the macros either. Hence, for markets to inch higher and fresh highs, earnings recovery is a must, Harsha Upadhyaya, Head - Equity investments for Kotak Mutual Fund said in an interview with CNBC-TV18.

“The valuations now appear to be on the higher side which we have been highlighting even earlier. Primarily, earnings continue to remain sluggish. The September quarter numbers have been sluggish which means that the full year consensus estimates would not be met,” he said.

Upadhyaya further added that FY18 numbers are not going to drive the markets anymore and in fact, there is a risk on those numbers. Added to that, we have some development in the middle-east which could create issues globally and impact crude oil.

Commenting on the macro picture, Upadhyaya said that the best of macro which India could have seen is behind us atleast for the short term. Crude seems to be inching up, rupee depreciation, and current account numbers, as well as fiscal deficit account numbers, may have seen best of time.

To the extent, best of macros may be behind us but that doesn’t mean that macros are going to turn the other way and we are heading for a disaster – it not the case. But, simply on macro improvement markets might not be able to move higher, it would require earnings improvement, said Upadhyaya.
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