See strong Q4 earnings on YoY basis: HSBC AMC

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Q4 results to trigger mkt upmove: PN Vijay

In an interview with CNBC-TV18, Tushar Pradhan, CIO, HSBC AMC, spoke about his reading of the market and his outlook.

Here is a verbatim transcript of the exclusive interview with Tushar Pradhan on CNBC-TV18. Also watch the accompanying video.

Q: Does it look like we have finally got the momentum going to breakout of our range?

A: I will not hazard a guess on where the market direction takes us. But I think overall there have been moves in the market which have surprised a lot of people. Initially we saw a lot of foreign money stay on the sideline and as a result we saw the market come off in the first two months of this year.

Post the Budget, there has been some encouragement because I think all this money which was on the sidelines started to come in and we saw a very smart rally. But then it means that the focus is back on fundamentals and earnings. I think earnings for Q4 ending March of this year, which will be upon us in a few days, is likely to be pretty strong. Again my pet thesis on a year-on-year (YoY) basis, I think these earnings are likely to look very smart at least for Q4.

I think a lot of analysts are going to jump back in and trying to revaluate their analysis for earnings estimates for FY11. I think on the back of this buoyant expectation, maybe a lot of upgrades are likely to happen. As a result, I think the entire valuation picture will change because your denominator is going to be a lot higher than what people had already estimated. Already some upgrades we have seen so far, but as we have seen in the past only after the event do analysts actually take a very hard and serious look at it. So I think in this phase of the market, it may just kind of not take any direction. But I think after the upgrade cycle starts to build up, I think there might be some serious chances of the market understanding where the base level of earnings are.