UBS says diesel hike likely post Prez poll, cautious on mkt

However, he is still cautious on India on macro uncertainties still overhanging.

In an interview to CNBC-TV18 he said, "The economic growth has a good chance of coming in below the 6% number for fiscal year 13. I would still tend to be quite cautious, skeptical about the government’s ability to push through reforms and also cautious on the market which is why we are probably defensively positioned."

Also read: Neutral on market, time to focus on sectors says Nilesh Shah

As an investment policy, he is cautious on IT and feels TCS may continue to outperform peers. Mahadevan is also expecting lacklustre first quarter earnings of Reliance to be announced on July 20.

Here is an edited transcript of his comments.

Q: Do fundamentals justify more upside or downside from these levels for the market?

A: I think specific stocks have done well, obviously TCS, HDFC Bank and clearly Infosys were a little disappointing. But clearly, the corporate and macro economic fundamentals indicate the risk to the downside. The latest one being the monsoons where I think it seems to be tracking below the long-term averages.

 I understand that it is probably still early days, but it adds one more layer of complexity for the government to do something meaningful. If the monsoons end up as being poor, the government might have to do more for rural India, which might mean a higher fiscal deficit. This prevents the RBI from easing as we would have originally thought. So with the latest data point monsoon, the risks probably for the market are towards the downside I would like to believe.