Revised Sensex March 2010 target to 18000: Macquarie

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Seshadri Sen of Macquarie Research said that even as the market outlook in the short term remained difficult to call due to mixed cues, he saw an upside to the market in the medium and long term. "We have revised our March 2010 Sensex target to 18,000," he added.

Q1FY10 earnings, he said, were likely to be better than Q4 of FY09. "High beta stocks continue to be our favorites for the long term, financials and infrastructure remain our top bet," he added.

Speaking on the inflation, he said, the inflation would move up by the end of the year but not to such a high extent as to spook the equity markets.

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Here is a verbatim transcript of the exclusive interview with Seshadri Sen on CNBC-TV18. Also watch the accompanying video.

Q: After the recent rally have you had reason to change your year end targets at all for the Index or you pretty much stick with that?

A: We did revise our March 2010 Sensex target to 18,000 around the Budget time, so yes we have because we are seeing continuous earnings upgrade starting to come through already and we think that that process will continue. So from a longer-term perspective we do believe that the market has upside and so yes we do see the previous top that was formed on Budget day being broken.

Q: What is going wrong with the foreign institutional investors (FII) flows over the last few days, since the Budget a billion dollars has gone out of the cash market if you take the QIPs out- is there some disappointment on the back of the Budget, is it monsoons, is it a global trend what is your sense?

A: It is a mixture of all three. To start with very unrealistic expectations were built up after the elections. There were many announcements looked for in the Budget which did not belong to the Budget; FDI in insurance, oil price reform don't belong to the budget and it was a little unreal for that to be expected. So there were a lot of flows which came in on the back that which I guess moved out.

Globally things also started to falter a bit and so that also added and plus that was a period when monsoon uncertainty was at its high, it now seems to have calmed down a little bit but that was the period when you saw the highest amount of monsoon uncertainty which also led to a little bit of outflows. But if the economy recovers and the earnings upgrade start to come through, you will probably see some of those FII flows start to come back.
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