Some earnings surprised on the upside: Forsyth Partners

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS US housing market slowing? Samavat 2063: What's in store for the markets? 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 29/05/12 Are Mutual Funds betting on Nifty?

Q: What has been reported what is the call on market? Are you overweight at this point and anecdotally have you heard of more cash being deployed after the earnings that have come out so far?

A: I think what's happening in terms of FII even with the collapse in May, I think what was surprising was that FIIs didn't completely exit the market and have a huge panic. Obviously, there was a lot of speculation, there was lot of hedge fund activity. So, a lot of the May scenario was caused by margins and a lot of FII money actually stuck there.

Anecdotally, when I speak to big institutions across Europe and UK, one senses that they are still looking at allocating money to India. They are very slow in changing their asset allocation and on a long-term basis, they think that it still a long-term story. It's very hard to call now. I know a lot of people are thinking it has had this great recovery and has even gone to new highs from May highs and June's low.

But on a long-term basis, it isn't a question of whether it will go to 15,000 it's a question of when it will go to 15,000 really.  I think there is a lot of confidence that there is very strong momentum in the market. Once there are changes that are on the scales of India, then it does have its own momentum. Obviously, there is a burgeoning consumer, obviously a lot of infrastructure as well.

Some of the power projects can add 1% to GDP. So that's a really strong belief from external investors, i.e FIIs that it is a very strong story. You cannot time it, it is very hard, obviously  9,000 was very reasonable. Then there was a phase where it could go below that. But there is a feeling that although it is not cheap, it still has a kind of momentum or we may see 10-15% correction. But over the long-term, it is still not feasible.

Q: With respect to IT companies, you said that there is a tendency to prefer IT majors because midcap stocks could face with more competition. What's the general feeling? Will there be a preference for midcap stocks in other sectors generally? Which sectors do you think will take off from here, going by the earnings?

A: I think, in terms of relative value, although you have some winners in the large cap space, the feeling is that obviously midcaps have under performed this year and they offer relative value. Again, it is quite company-specific, you cannot just buy midcaps and as an asset call.

One has to be more discerning. But the feeling really among all of the managers in India is that they basically feel that midcaps offer relative value. In terms of earnings, when one looks at media and some of the retail, they might be playing real estate as well. For example, Crompton Greaves may be an indirect play. Media is very exciting sector, not just in terms of broadcasting, there are Set Top Boxes and Direct To Home services, and the fact that the cinema prices have gone up. People are very keen to spend on entertainment; it is such an important part of India.