Either the market will correct or the recent rally which is driven by certain stocks will spread to midcaps and smallcaps, said Udayan Mukherjee, Consulting Editor, CNBC-TV18, in a recent interview.
Mukherjee talked about many issues such as interest rates, FII flows, macro indicators, rupee and portfolio positioning, during the interview.
The initial trends of the first quarter earnings season looked like as if the Nifty may find it hard to log a 25 percent earnings growth for this fiscal year, Mukherjee said. The reason for this is the lack of sectors capable of providing huge earnings, he added.
“The recent rally has been driven by a handful of stocks, but this trend cannot sustain,” said Mukherjee.
“I give this kind of a narrow market no more than 8-12 weeks. Either the market will correct or the rally will spread to midcaps and small caps,” added Mukherjee.
After TCS, the numbers from other companies were either good or not great. The earnings season so far cannot be said that it is all bad as the numbers are mixed, said the Consulting Editor.
Even though the IT sector outlook has improved marginally, the valuations of the sector have rerated even more in a hostile way. However, The IT sector together with private banks and consumer attracts most of the capital nowadays, hence we could witness stocks holding up, said Mukherjee.
People managing portfolios are disappointed as the mid and small caps have seen a defeat. Before the year ends, we could expect at least one or two more rate hikes in the Indian market. Indeed, this is also one of the reasons why the mid- and small-caps are not performing up to the mark, said Mukherjee.
When crude prices increase, the rupee is weakening and interest rates are increasing, and the midcaps struggle, said the Consulting Editor, CNBC-TV18, according to Money Control. He also suggested to stick with quality, and not to be adventurous about mid or small caps or aggressive portfolio management plans.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]