HSBC bearish on India, says Q2 to decide market moves

He is bearish on India due to rich valuations but adds that the rally from 5,200 adequately reflects improved sentiment.

According to Sriram, the market direction is likely to be determined by the second quarter earnings. "You will see another 1-2 percent to the Sensex target of Rs 1,235 to Rs 1,240 of earnings. A lot of the disappointment will come from areas such as banking," he said in an interview to CNBC-TV8.

Sriram is expecting Indian market to consolidate in the near-term.

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Here is an edited transcript of his comments.

Q: After the smart rally that we have seen do you see a lot more upside between now and the end of the year?

A: I do not. We are almost forecasting flat markets till the end of the year. You will have a reality check coming through the earnings. The Indian market, in the last few quarters of earnings had some trimming of earnings every quarter after the earning season.  I don’t think this is going to be an exception. You will see another 1-2 percent to the Sensex target of Rs 1,235 to Rs 1,240 of earnings. A lot of the disappointment will come from areas such as banking.

Banking is an area where stressed assets continue to be an issue. If I recollect some press articles in the interim, CDR references have continued to be quite high. So I think those are areas that are going to be causing little bit of bother for the market.