The correction is brining strength in the market and may take the markets higher than the current position, says Sanjay Sinha, Founder, Citrus Advisors.
Nifty going below 8500 levels will be surprising in case of a prolonged uncertainty on the global front, said Sanjay Sinha, Founder, Citrus Advisors. "If we have this uncertainty evaporating in the short-term somewhere around 8,700 points, we should see the markets take a support and then move up," he added.
The current phase of correction is brining strength in the market and may take the markets higher than the current position, he told CNBC-TV18.
Adding to it, expectations of a double-digit earnings growth in the third and fourth quarter will keep the market going, Sinha said.
Below is the verbatim transcript of Sanjay Sinha’s interview to Prashant Nair & Ekta Batra on CNBC-TV18.
Ekta: This correction in the market is it a buying opportunity or are we going to see further dips?
A: To answer that question in two parts, first is this correction itself, how deep will the correction be and how long will it be I think that would be one part of the answer and whether we should be buying in this correction. So, in my opinion the length of this correction to a large extent will be a function of how prolonged is going to be the uncertainty on the global front. If this uncertainty is going to prevail for too long that will also decide to some extent the debt of the correction.
I expect that if we have this uncertainty evaporating in the short-term somewhere around 8,700 points or so of the Nifty we should see the markets take a support and then move up. If this gets a little more prolonged I will be surprised if on an enduring basis we see the Nifty going below Rs 8,500 points.
Having said that the second part which is as to what should be our behaviour in this correction, I think this rally that we saw building up from the 6,800 points on the Budget day to almost the threshold of 9,000 points and this correction in my opinion is bringing a little more strength to the market and gives us that much more opportunity to go to even higher levels of the Sensex and the Nifty. This conviction is actually coming from the fact that last time we visited 9,000 points on the Nifty was in March of 2015 and then we stared at a 2 percent de-growth of the earnings in that financial year and also FY16 earnings were not so good. Prospectively, if I look at the earnings more or less we are talking about a double digit earnings growth in FY17.
Prashant: Earnings growth in the first quarter is about 8.50 percent, looking at the Nifty, I have not updated my numbers for the last day but more or less about 8.50 it won’t change that much with one or two companies here and there. The consensus expectation is 9 percent so we are all saying that while earnings are matching the financial year 17 expectations but it is still 8.50 percent that is the point one has to keep in mind, right?
A: This double digit expectation of the earnings growth means that the earnings growth in the third and the fourth quarter of FY17 will be much better than what we have seen in the first quarter.