Abhijit Chakraborthy of Edelweiss feels that broadly Q4 numbers will be disappointing. He expects the Sensex to touch 14,000 levels in April. According to Chakraborthy, hedge funds are on the sideline due to redemption pressures. Some hedge funds have seen a 25-40% fall in NAVs in the recent downfall, he said.

Speaking to CNBC-TV18, Chakraborthy said he expects a guidance of 18-20%, in rupee terms, for Infosys. He is bullish on telecom stocks like Bharti, RComm, which he says will report robust numbers. However, is also sees the possibility of a correction in power stocks. Chakraborthy added that no slowdown in expected in capital and engineering goods and in the infra space.

Excerpts of CNBC-TV18’s exclusive interview with Abhijit Chakraborthy:

Q: Give us a sense of what you are hearing from your global clients, both the long only and the hedge variety?

A: The sense we get from them is that the mega long only clients are beginning to buy into the market. They are basically nibbling at stocks which are at attractive valuations. But if one sees the prop books, or the hedge funds, that are primarily driven by absolute return considerations and some of them are also facing redemption pressure, they are largely choosing to stay on the sidelines as of now.

Q: What is your own sense of market now? After yesterday’s sell off how do you see the whole month of April panning out?

A: I broadly feel that the directional correction which was required in the market is largely over. However, in the short-term, the market is not going to see any significant short-term recovery. It’s going to sort of consolidate and react to the short-term news events panning both, domestic as well as international markets.

In the extreme short-term, the fourth quarter numbers could be providing a cue. Unfortunately I think the Q4 numbers are going to be broadly disappointing, there's hardly going to be any positive surprises. The fact that economic data, inflation is also becoming a major concern for future growth, I think April could once again see a correction and we can perhaps come back and test the levels of 14,000.

Q: Is it just redemption pressure for these hedge funds or do you think that’s the tactical call they are taking as well that these markets might grind to lower levels and bet a price points?

A: These hedge funds, or the prop books, they are primarily driven by absolute returns consideration, they are not based on relative performances. In a market, which is so uncertain, it makes sense for them to be on the sidelines, to reduce their activity in the market, that is one reason why the activity is slow. Of course, some of the hedge funds have seen 25-40% of a downside in their performance in the NAVs (Net Asset Value) in the first three months. This has resulted in some kind of a redemption pressure.

At the same time, obviously, there are questions being asked on whether this growth in Indian markets is going to be sustained, whether valuations are going to come back and all that. So I think there are a lot of moving parts and people are choosing to stay away and wait for things to crystallize.

Q: I believe you are expecting a shocker in the guidance from the IT companies, why is that?

A:  I think it’s already known in the market that Infosys has been talking down the expectation that Street has from it. Compared to about 20-23%, kind of PAT (Profit After Tax) growth that they have expected to do for FY08, given the fact that the Rupee continues to be an issue, the billing rates are still under pressure. Also, there‘s not much clarity whether the IT Budgets are going to be maintained or how severe the cut is going to be. So being on the judicious side, Infosys is definitely going to give a more subdued kind of guidance. We are expecting anything between 18-20% kind of guidance on Rupee terms for Infosys.