Mkt upmove impossible, might slump instead: Brics Sec

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Mkt upmove impossible, might slump instead: Brics Sec

In an exclusive interview with CNBC-TV18, Anand Tandon, Director Equities, Brics Securities, spoke about his reading of the markets and the road ahead.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Mkts to see upside in short-term: Sampriti Capital Experts see higher likelihood of cuts than upmove in mkts ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 01/06/12 Are Mutual Funds betting on Nifty? Other Stocks in this news ITC | Fortis Healthcare |

Q: Where do earnings fit into this block, how do you think that will show up us up in the next quarter?

A: I think this year's earnings more or less are in the bag, most numbers are not going to change dramatically in terms of forecast. The issue really is next year's earnings. I had mentioned once earlier that for example the gross domestic growth (GDP) growth we are showing is not something that I am kind of comfortable with. The easiest case to make against that is the agricultural figures; we just had the second release of the advanced estimates coming through. Even now we are looking at almost 10-11% degrowth in volume terms in major food grains. Other than soya which apparently has grown some 3% overall year-on-year everything else has gone down between 10-11%. With that kind of degrowth to say that we have only 0.2% real degrowth in agri, I don't think is tenable. I think you have to push the numbers really hard somehow to make the two reconcile.

If you look at the credit growth in the system, I think that is extremely anemic, if you look at the CMI figures they claim that Rs 4 lakh crore of project should have got capitalized in March ending this year and Rs 6 lakh crore are going to get capitalized in the next year. Now either that means that all the borrowing is already taken place or this number doesn't square with the kind of credit growth that we are seeing.

If you put all of this in context clearly it means that while we are having consumer growth largely because of government expenditure, there isn't enough investment growth that is happening, there isn't enough demand other than through government expenditure that is coming through. The NREGA programme is a great programme for selling into rural India but for everything else we should keep our fingers crossed and hope that somehow things continue the way they are.

So the estimates for this year are likely to change and the estimates for next year to my mind, I am not necessarily completely in line with what they would be by another six months from now.