India's FY13 GDP may come below 7%: BofA ML's Jaipuria

Jyotivardhan Jaipuria, head of research at BofA Merrill Lynch sees risk of GDP coming below 7% in FY13. Moreover, he also said that the FY13 earnings growth would be in the range of 10% versus 16% consensus. He expects significant marked down in FY13 earnings.

Shifting his focus to the Indian currency, he indicated that people are more optimistic that the rupee will not see any sharp depreciation from these levels. No one has been expecting a systemic risk to the banking sector, but Moody's downgrade reaffirms worries in that space, Jaipuria pointed out.
He also stated that the aviation sector has been hit heavily by heavy oil prices. Also read: RBI can consider rate cuts going in 2012: Macquarie Sec Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: It has been a fairly pedestrian one week for earnings. Will the markets run into more headwinds or are you optimistic that the bad news is in the price?
A: On the economy and earnings side, there is fairly some bad news to go. We might see disappointments in both, the economy as well as earnings. This season, we had low expectations for the earning, but on the margin, earnings have disappointed.
We have seen consensus earnings for both FY12 and FY13 getting downgraded again. To that extent, we are seeing downgrades coming through.
The one positive spot for the market is that rate cycle is peaking off. If RBI pauses, then it will be positive for markets, where rate will come off and people would expect a cut in interest rates. Q: Last time, you had a single digit earnings target for the next year. Since then, there has been State Bank of India, Tata Steel and many midcap disappointments. Do you fear that earnings targets will have to be scaled down significantly after what has happened this quarter?
A: It still remains the same. We will get earnings in the range of 10%, both in FY12 and FY13. The analysts are still more optimistic for FY13, as the consensus look at around 16% growth.
This will gradually get marked down as more earnings numbers and economic data comes through, which is pointing to a bit of a slowdown. Q: At the Economic Forum, how concerned are people about the impact of forex and companies with global exposure? Many companies have suffered on account of the global arms and forex volatility that they had to deal with.
A: We have seen a sharp depreciation and most people don