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Last Updated : Feb 07, 2019 09:59 AM IST | Source: CNBC-TV18

Market confidence will return once there is political clarity: JPMorgan's Bharat Iyer

'Our expectations are market returns of 10-15 percent and we do see areas like banks and OMCs giving you outsize gains,' said Iyer.

CNBC TV18 @moneycontrolcom

Bharat Iyer, head of India equity research at JPMorgan, spoke to CNBC-TV18 about how markets are likely to behave ahead of general elections and shared his views on select sectors.

"I guess confidence levels (in the market) will return only once the political clarity is there. I think 2019 will be a very volatile year because on the positive side, we are seeing earnings making a comeback at least for the largecaps and this is the way the cycle typically unfolds. The largecap starts delivering earnings and then the midcaps follow through after a lag," Iyer told CNBC-TV18 on Wednesday.

"Our expectations are market returns of 10-15 percent and we do see areas like banks and OMCs giving you outsize gains," said Iyer.

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Talking about various sectors, he said, "I wouldn't say there is pain but I think we are at a relatively later stage as far as the business cycle is concerned. Specific to autos, what is not helping is these one of measures – there is insurance now, there will be the new emission norms that come into force. So I think autos is a unique subset that is feeling pressures because of both late cycle issues as well as some regulatory issues. If you look at some of the larger sectors, banks - for example - are doing extremely well, there are some signs of recovery in some select infrastructure areas, I think you should get a margin recovery because input costs have come down meaningfully over the last quarter, so I guess there are positives to look at as well."

Regarding the promoter issues which have resurfaced in the last three-four months, Iyer said, "These are very company and promoter specific issues and you will have to view it as such. I don’t think it is a very broadbase issue, which will impact large parts of the benchmark. The worst of the liquidity squeeze is over. I think the epicentre of this whole issue was sometime in September-October when everything that could conspire against liquidity went against but after that at the systemic level, we cannot complain about liquidity. I think the Reserve Bank of India (RBI) has gone out of its way in terms of assuring the system of liquidity. In terms of the policy response itself, we should see a change sometime later this week when the monetary policy committee (MPC) gives its announcement, so I think this is not a system problem. I think these are unique issues that are impacting a few promoters or a few companies."

Source: CNBC-TV18

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First Published on Feb 6, 2019 04:09 pm
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