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Wednesday, Aug 21, 2019

‘Earnings season will push up Sensex by 7%’

businesspaper Updated: Jun 16, 2016 08:20 IST

MUMBAI: Corporate earnings in key sectors will grow by 15% to 25%, which will boost by the Sensex by 7% to 8%, Motilal Oswal, chairman and co-founder of the Motilal Oswal Financial Services, told HT. Excerpts.

The markets are on a roll today. What is happening?

Overall, there is a feeling that India’s fundamentals are stronger than most other markets. There is comfort in the currency, in inflation and if monsoon is good, there will be rate cuts also. I think we will see corporate earnings in sectors, such as, pharma, cement, auto, banks and IT grow by 15% to 25%. This will push up the Sensex by 7% to 8%.

What is the basis for such optimism?

We have seen two fiscal years of flat-earnings cycle. This time, some of those factors are improving. The fears of a sharp interest rate hike in the US may be slow, and there are pockets of growth being seen. I won’t say all is fine. There will be some pain for banks, and metals and power spaces may be laggards. But the market is all fired up with the biggest reform of all, GST. Most of the states are in line and this will benefit many industries.

The Sebi chief has raised the issue of retrospective taxation…

That is settled. The finance minister has assured foreign investors that India will adopt a tax-friendly approach, and I think most investors are convinced.

But the new norms on P-Notes are likely to hit foreign inflows.

The new norms make it more transparent, and reduce the number of nonserious investors.

Foreign investors still think India is expensive.

It is neither cheap, nor expensive. There might be a small correction. But the fundamentals point at a revival. We have seen almost $12 billion of investment from domestic players, which is more than what they invested over the last nine years. Most of this is coming in the form of mutual fund inflows. That shows a maturing of the market.

First Published: Jun 16, 2016 08:20 IST

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