Revised Sensex March 2010 target to 18000: Macquarie

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

Q: We are very young in earning season but what are your expectations of this quarters earnings might go by and what it might do to justify the way market is trading right now?

A: This earnings season, I don't think will be spectacular, it won't be terrible either. We were all expecting an economic recovery only in the second half of this year; we are still going through a slightly difficult period for the economy and this earnings season obviously looks back at the April to June quarter when the economy was still tottering a bit. So it will be better than the January-March season, which is one positive cue for the market but it certainly won't justify the current valuations but I think the valuations look beyond this current quarter.

Everybody recognizes that the economy is coming out of a trough and as long as the lead indicators for an economic recovery in the second half remain in place, I am not sure that the market will be too spooked by relatively ordinary earnings numbers. I just want to say that I don't think they will be terrible but they will be just ordinary.

Q: From a tactical perspective what would you do now - would you load up on high beta which has been leading this rally, infrastructure, real estate, financials, metals or would you want to lean a bit more on the defensive side after the current rally and the recent correction that you have seen?

A: Tactically short-term you may want to load up a bit on defensives but we have a slightly longer-term view and for that I think the so called high beta names continue to dominate, are favourites. We do expect just the sectors that you enumerated financials, property, infrastructure do remain our favourites because we think there is still upside to the market and it is better to play leverage to an improving economy rather than trying to be defensive at this stage.

But in the short-term defensives may work better but that is really difficult call to make.