How will markets behave during earnings season?

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The benchmark Nifty retreated nearly all its Tuesday's gains and closed below 5250 level, dragged by oil & gas, financial, metal, auto, realty and select infrastructure companies' shares. This pull down was mainly led by negative global cues.

The 30-share BSE Sensex closed at 17,471.03, down 143.45 points or 0.81% and the 50-share NSE Nifty fell 47.95 points or 0.91% to settle at 5,241.10. However, the Nifty July futures ended at 6 points premium.

How will the market reverse through earnings season?

Amit Dalal, Executive Director, Tata Investment Corporation Ltd said that the market is going to remain dull. According to him, even the earning season will not give the kind of kicker that we normally expect it. He reasoned that this is mainly because it has been now almost three quarters where we have been seeing a very high growth and good numbers and the base had become quite high.

 "So the expectations from earnings and valuation expansion that one would want will perhaps not be there from almost all sectors across," Dalal added.

Agreeing to him, Ajay Parmar, Head - Institutional Equities, Emkay Global Financial Services Ltd  said that the first quarter is a leaner one. Parmar added that it will be very crucial because we are going to see some changes in the last quarter strength that is the raw material increase is likely to be seen. "The EBITDA margins are likely to be little under pressure so this quarter will be very crucial for the trend of the market. People have been factoring this on a conservative level almost growth of 12-15%," Parmar explained.

Elaborated Sudarshan Sukhani, Technical Trends that the market could go up but it doesn't look as if there is enough momentum for it to go up however it might even surprise us.

What is the strategy to cope up?

Parmar advised that it is best to be more stock specific. He recommended some companies from the pharma, auto and agri inputs companies like fertilisers, seeds pesticide.  In the pharma sector, Torrent, Cadila, Rallies, Coromandel International are the best pick, he said.  Bajaj Auto, Hero Honda and Mahindra & Mahindra are the top picks in the auto sector, he added.  "Some of the banking stocks which I believe are available or the PSU stocks which are available at reasonable good price to book value ratios," he added further.

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