After a blockbuster rally in the year 2017, Indian markets are dancing on the tunes of global markets, a trend which is likely to continue in the near term, Pramod Gubbi, Ambit Capital said in an interview with CNBC-TV18.
Indian market is under pressure largely on account of both domestic as well as global factors. But, in the near term, it will be global cues which will give direction to the Indian market.
Investors should also keep a close eye on the dollar which is moving in its normal direction. We might have seen a bottom of the dollar which might not auger well for emerging markets like India.
Commenting on the earnings front, Gubbi said that the December quarter results demonstrated some sort of pick up. The last 3 years have not been that great for Indian markets and India Inc.
He further added that we will finally see a double-digit earnings growth. However, Gubbi said that we are not as optimistic as getting to 22 percent but we see a 15 percent earnings growth in FY19 which us a significant jump from the kind of figures we have seen in the last 3-4 years.
Commenting on the sectors, Gubbi sees value in consumption related sector to gain traction. Also, private sector financials can also be a good bet especially those which have a strong CASA franchise.
It is clear that the cost of funding is clearly going up in the market and in the rising interest rate regime, you would expect some of these banks which have sticky liability franchise. If the dollar continues to appreciate, IT might come back to contribute towards the earnings growth at the index level.
Commenting on the flows, Gubbi said that we have seen the return of FIIs flows in January. Most people are closely watching the Dollar which may shift some of the asset calculation back in the US.
“If US Treasury yields cross 3 percent, we might see the shift accelerating towards the middle of the end of the year,” he said.
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