Market running ahead of valuations; sharp earnings recovery priced in: UBS Sec

UBS has released their 2018 market strategy report and to discuss this CNBC-TV18 spoke to Gautam Chhaochharia, Head-India Research, UBS Securities.

For our market per se, all the drivers that helped it last year like liquidity, big bang reforms, lower oil prices etc are behind us. The only thing in place is the global macro environment which can help market. However, if one were to see 10 percent earnings cut then it is difficult to see multiples keep on sustaining.

Fundamentally, Chhaochharia says the markets are running ahead of itself and it is not a level where one can make buying positions unless one wants to play for the liquidity driven rally to continue.

He also shares their rationale for thinking that a goldilocks scenario of a sharp earnings recovery appears to be priced in. The house has a 13 percent earnings growth in FY19 as opposed to consensus view of 22 percent growth.

For the full discussion, watch video.