Expect Sensex to fall 10% in next 1 yr: Ridham Desai

India's weak macro growth trends and stubborn inflation have not surprised Ridham Desai who says tackling inflation still remains a task and growth is likely to be tepid for want of strong fundamentals. Speaking to CNBC-TV18, Desai a top notch economist at Morgan Stanley, points out at India's failure to fix savings deficit will lead to volatility when US bond yields surges.

Desai is expecting a spike in US bond yields on the back of better-than-expected macro data. He also sees India falling prey to volatility on fears of US Federal Reserve tapering next year. Strengthening US data will not only draw flows back to the US from emerging markets but will also lead to deeper correction at home, Desai warns.

The sell-off in equity markets will, however, not reach panic levels any time soon but a 10 percent downside on Sensex in next 12 months is possible. He is selectively bullish on banks and cautious on cyclicals.

Speaking on July-September quarter numbers of India Inc, Desai says they look better because of a depriciating rupee. Overall, the broader market results were far from encouraging.