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Global cues biggest risk for mkt; see 5-7% fall: BofA ML

The Indian market has been moving higher on positive domestic developments; other emerging markets have done well because of strong global inflows, but given the global cues one could see a tactical correction in emerging markets, Jyotivardhan Jaipuria, Head of Research, BofA ML says.

Indian indices have seen stellar run this year. On a year-to-date basis, Indian equities have been one of the best performing markets in the world.

Jyotivardhan Jaipuria, Head of Research, BofA ML remains bullish on the Indian market. In an interview to CNBC-TV18, he says that India Inc’s earnings are likely to double over the next four years and Indian indices would mirror those gains.

However, for now, global cues, especially interest rate hike by the US Federal Reserve, continue to be the biggest risk for Indian equities and could spoil the party. He foresees a 5-7 percent correction from the current levels.

The Indian market has been moving higher on positive domestic developments; other emerging markets have done well because of strong global inflows, but given the global cues one could see a tactical correction in emerging markets, he adds.

On his sectoral bets, Jaipuria is very positive on the oil and gas space . He is bullish on bans and expects a big re-rating in public sector lenders. But his biggest overweight sectors are auto and cement. On the other hand, the research firm is neutral on export-oriented sectors – IT and pharma. It is also underweight on telecom and consumer staple stocks.

Meanwhile, he sees midcaps outperforming over the next four years and recommends investors to allocate 20 percent of their portfolio in this segment.

Transcript to follow shortly

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