Sanjeev Prasad of Kotak Securities said Wednesday's trade reflects continued confusion in the market. "There is confusion about earnings growth, and possibility of downgrades."
Issues have started emerging in almost every sector recently, he said. "Global issues have not played out. Commodities also are a concern."
According to Prasad, there is a possibility of earnings downside across most sectors. "Growth may slow in cement, banking, real estate, and commodities."
Excerpts from CNBC-TV18's exclusive interview with Sanjeev Prasad:
Q: What do you think the market will do next? We had a pull back, but it is not sustaining?
A: It reflects the confusion in the minds of the investors at this point of time. On one hand, you are seeing evaluation which started on a reasonably attractive manner. It’s about 15 times on March ’09 basis, and if we adjust the value for the committed assets, then we are looking at about 12.5 times. That’s probably at the bottom of the variables in markets between March 2005 and August 2005. This was probably a period when you would have seen reasonable and sane market behavior. On the other hand, what you are seeing is a lot of confusion about whether this earnings growth or whatever we are forecasting will come through or not. Most people on the street would be looking at a 18%-20% range. So the dilemma is whether the earnings numbers would have to be downgraded for most sectors in the course of the year based on events. You are starting to see a lot of issues starting to emerge, both on quality as well as quantity of earnings going forward.
Source: Moneycontrol.com
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