See 10-20% downside for mkts in Q1FY11: Tower Capital

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In an interview with CNBC-TV18, Sandeep Bharadwaj of Tower Capital, spoke about his reading of the market and his outlook.

Below is a verbatim transcript of the interview. Also watch the video

Q: What's your sense of the market? We have had a breakout-Nifty trading above 5,050-mark. What's your sense? Are we heading towards the recent highs of 5,300 or so for the Nifty or you think there will be some consolidation around these levels?

A: Our markets have primarily taken to global cues-global markets are up so we are also up. We didn't find anything positive in the Budget to justify this rally. It's more of a case where people are looking at he prices and then figuring out whether the Budget is positive or not. And mostly the opinion is from the majority that the budget is positive.

We would follow global events very closely. We have the Volcker Committee meeting today, which talks about whether most of the investment banks can have proprietary trading or not. That can have a major impact on the markets.

Second is the meeting with Germany and Greece tomorrow. We are of the opinion that Germany will not be lending any helping hand to the Greek Government's problems. These two events can negatively impact global equities dramatically in our opinion. This month we expect some major falls in the market.

Q: So what kind of a range are you giving the Indian markets itself and would you say that there is a 10% downside? What is the range for the markets say for the next quarter?

A: We are giving a range of about 10-20% of downside in the Indian equities.

Q: There seems to be an emerging majority that towards the latter part of 2010 the markets could gather more strength because of the fundamental reasons. Would you share that view? Do you think by 2010 end this market could see significant highs? What is the in-house view at Tower Capital?

A: It's a difficult one for the whole year because we take it quarter-by-quarter and that's how we build our opinion. It's humanly not possible to predict those things but what we are observing is that corporate earnings will be a bit down after the Budget. We will see that the consumption story will take a hit. We are a bit reserved in our opinion in terms of where our markets will head higher by the end of this year.